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Google Inc.'s Acquisition of AdMob
Case 9 20 2013 001
Case published in the International Journal of Case Studies in Management, Vol. 11, No. 1
Author : 
Languages : 
  • English
Keywords: 
  • Growth by acquisition,
  • Valuation
Year of production : 
2011
Registration date : 
2013-04-15
Teaching notes included : 
Yes
Abstract

This case describes Google's decision in November 2009 to purchase mobile advertising start-up AdMob in a cash-and-stock deal valued at $750 million. The objectives of the case are: to highlight the role of acquisitions as integral to Google's growth strategy; to explore the extent to which the perception and pricing of Google as a growth stock necessitates the continual search for new growth opportunities; to determine the drivers of growth in the online advertising market and different segments within that market; and to navigate the considerable challenges of valuing a potentially high-growth start-up both as a stand-alone firm and as an acquisition target.

Primary domain : 
Finance
Secondary domain : 
Not available
Sectors : 
  • Information and cultural industries
Source : 
Elsewhere
Type : 
Traditional case 
Type of data used in the production of the case : 
Undefined
Event location : 
USA
Year of start of the event : 
2009
Year the event ended : 
2010
Business size : 
$24 billion (2009)
Teaching objectives

The objectives of the case are:

  1. to examine how the perception and pricing of young technology companies such as Google impact management’s search for new and growing product markets;
  2. to highlight the role of acquisitions in Google’s growth strategy;
  3. to determine the drivers of growth in the online advertising market and different segments within that market; and
  4. to navigate the considerable challenges of valuing a potentially high-growth start-up both as a stand-alone firm and as an acquisition target.

This case can be used in either an undergraduate or graduate finance case course and can be completed in a two-hour class session.