Many view mergers & acquisitions as a strategy intended to expands companies existing footprint/product lines, diversify, or realize costs synergies. M&A is less frequently viewed as a method to build entirely new products.
Google’s new Pixel smartphone is an excellent example of a company using M&A to develop a new product. In a mid-October blog post, PitchBook.com highlights “8 strategic acquisitions behind Google’s Pixel“.
Starting in February 2015 Google (Alphabet) made at least 8 strategic acquisitions/investments in companies with smartphone-related technology.
The acquisitions include NimbuzCloud a provider of cloud-based storage for consumer photos and videos, Skillman & Hackett a company that developed virtual reality painting studio and other art applications, Lumedyne Technologies which designs and develops sensors used in consumer electronics, Speaktoit (also known as Api.ai) which developed a platform offering natural language interactions for devices, and more.
While initially, it may have been hard to understand how some of these acquisitions helped Google’s existing business, the acquisitions now make a lot of sense knowing Google was developing its own smart device.
The resources Google acquired in these acquisitions likely cost less than in-house development. These acquisitions were also all made in the last 2 years thus accelerating Google’s development of its own smart device.
If you are developing a new product, have you ever thought of acquisitions that could get you there faster for less capital? Did you make an acquisition? What were the results?
Ben Kotch is a managing director and investment committee member at Acquis Capital, LLC, a private investment firm that specializes in acquisitions. He has extensive experience with both private and public companies. Ben graduated with an economics degree from Bentley University where he concentrated in entrepreneurship and law.
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