Acquisitions of small companies by large companies happen all the time at "crazy" prices. GOOG paid $200 million for Slide in 2005, which was 200 times revenues at the time. Yes, you read that right. But the team who built Slide (about 50 engineers) had built a mobile operating system, more or less, and (properly incentivized) that team was able to build Android, the GOOG mobile phone operating system in four months. Had GOOG been forced to repartition its own engineers to build it, taking them off of search and other projects, it would have taken two years, and wouldn't have been as good.
So what was it worth to GOOG to be able to gain 18 months or more in speed against Apple, who was at the time threatening to restrict Google search access to their iPhones (angrily, Eric Schmidt resigned from Apple's board)?
Here it was a make-or-buy decision that was easy. It was a no brainer for GOOG to "over pay" for Slide and get Android "out there fast," rather than wait and just hope for the best.
Happens all the time. Good to be Slide.
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Finance: What's the difference between m...23 Views
Finance allah shmoop what's the difference between mergers and acquisitions
all right people listen up Merger that's what's about to
happen here it's a merger acquisition that's what's about to
happen here Corporate america is kind of same thing when
two companies merge while they generally you know attracted to
each other hopefully respect each other they share stock or
combined the stocks of each side and you know combine
efforts and then and then cuddle afterwards if they're successful
at the merger than the combination of two roughly equals
yields more than the one plus one combo that made
them so two companies get together on generally equal ish
footing In that case acquisitions are a combining more like
that eating thing on much different footing The large company
eats or buys the target either using its more highly
valued stock currency or it's taft to do so Well
why would a company acquire another Well the target might
have one hundred employees ninety of whom can be fired
with massive expense savings after the acquisition For the acquirer
such that economically the acquisition won't just makes a whole
lot of financial sense acquisitions happen for market power reasons
As well like imagine the negotiating leverage that amazon would
have if it bought the next five biggest online retailers
Or maybe it'll just kill them Probably not legal for
them to buy him anyway given the monopoly like dominance
of amazon these days But wow that would be a
powerful set of acquisitions And that would be a good
reason for ems on to acquire a whole bunch Things
and bezos would grow even more powerful maybe too powerful
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