Google has been buying companies at the rate of one a week for the past couple of years. Most of these companies are bought for under $10 million, but there have been larger high profile acquisitions for nine to 11 digits: $400 million for Admeld (online advertising), $151 million for Zagat (restaurant reviews) and $12.5 billion for Motorola Mobility.
When you look at Google’s financial statements in Visual Finance format (with every “stack” being $5 billion), you get a sense of that acquisition strategy:
The “lit” area here shows Google’s assets on its Balance Sheet at year end, 2011. The biggest amount is the $35 bn in Short-Term Investments (plus there is another $10 bn in the Cash and Cash Equivalents circle, hidden by the ratio view). The next largest assets are Google’s $10 bn in PP&E (upper right), and then $7.5 bn in Goodwill (furthest right).
In other words its Goodwill – the amount that it has paid in excess of book value for its various acquisitions – is almost as much as the entire value of its Property, Plant and Equipment. It grows by buying whatever it needs, and it has the cash to do it. Their high profitability, 26% of sales, demonstrates their strategy is working well.
Google has become a huge part of Andromeda Training’s structure, just as it has of many businesses. We respect not just their products and services, but their culture: after all, the visualization and transmission of information, and a reputation for a love of games, is what Income/Outcome and Visual Finance are all about as well.