This morning, Google announced that it would acquire dMarc Broadcasting, Inc., a company that provides an online platform for buyers and sellers of radio advertising time. The stated rationale for the acquisition is that Google wants dMarc's technology for its AdSense program. Interestingly, even though Google stock is trading near all-time highs ($467), Google is paying the acquisition price in cash, $102 million. The price also contains future payments contingent on certain milestones. The future payments could reach $1.136 billion over the next three years or be "substantially lower." WSJ article here.
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1. Posted by Michael Guttentag on January 17, 2006 @ 11:27 | Permalink
I would defer to Vic, but I think there is another aspect about the way Google has structured this deal that is intriguing: the apparently large extent of the payout that is contingent on future performance. It makes so much sense, particularly with growing companies that are often purchased for their management teams, to make payouts contingent on future performance. Why don’t more companies do this? In my experience there were tax and accounting consequences that made us shy away from contingent payout deal structures. Nice to see Google is not putting the cart before the horse.
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