Professor George T. Geis teaches in the areas of mergers and acquisitions, financial modeling, entrepreneurship and accounting at UCLA Anderson. In his latest book, Semi-Organic Growth + Website: Tactics and Strategies Behind Google’s Success, Geis analyzes Google’s distinctive expertise in the area of M&A. He shares here why he chose the iconic company’s “playbook” to examine the escalation of M&A activity as a growth strategy.
By George T. Geis
M&A activity in 2015 is hotter than ever, with some $2.15 trillion worth of deals announced during the first six months of this year, according to Dealogic. There is no shortage of companies rushing about in a series of acquisition cascades in industries that include technology, media and health care. Will they all be successful? Research indicates that many will not.
There are some notable companies that have made great strides in building M&A as a core strategic capability, adding highly successful M&A processes into their organizational DNAs. Consider the Walt Disney Company. Beginning with its $7.4 billion stock-for-stock acquisition of Pixar in 2006, the company has continued an acquisition spree that has included Marvel Entertainment, Lucasfilm and Maker Studios. Disney’s market value has increased some 250 percent over the past five years, a lofty percentage virtually identical to that of high-flyer Apple over the same period.
Companies that think systematically about all major aspects of M&A capability — from strategy to valuation to integration — really piqued my interest. Just look at Google. Acquisitions have played a particularly important role in the strategic unfolding of this iconic company. Google has been an experimental lab, not only for products and services, but also in utilizing M&A to further its purposes.
I wrote Semi-Organic Growth to understand in depth why Google was engaging in what was an unprecedented level and type of M&A activity. During its short history, Google has acquired some 200 companies. But there’s more to the story than numbers. A major thesis of this book is that early in the company’s existence, a playbook for M&A activity (which I dub semi-organic growth) was imprinted on the company and that this pattern became a core element of Google’s success.
There is more about this topic in a short video about Semi-Organic Growth.