Targets for Google's Merger Machine

With $22 billion in cash behind him, CEO Schmidt wants to make an acquisition per month. Find out what companies may be in Google's sights

By Douglas MacMillan

David Lawee google.com

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When entrepreneur Mike Cassidy wanted a meeting with Google's top brass recently, he knew who to call. Cassidy was advising a startup that was in talks to be sold to Google (GOOG) and he turned to David Lawee, Google's head of corporate development. Within three hours, Lawee had convened a sit-down that included one of Google's three highest-ranking executives.

Google's dealmakers are moving fast. Flush with $22 billion in cash and emboldened by signs of recovery in the core Web-search market, Google plans to snap up companies at a pace of about one a month, CEO Eric Schmidt told analysts on an Oct. 15 earnings call. That may represent a steep acceleration for a company that's made 32 reported acquisitions since it went public—only five of them in the past two years, according to Thomson Reuters (TRI) data.

Shopper-in-chief at Google's Mountain View (Calif.) headquarters is Lawee, a four-year Google veteran who was tapped to lead mergers and acquisitions in 2007 after a stint as head of marketing. A seasoned entrepreneur who helped start Toronto venture capital firm Mosaic Venture Partners, Lawee is well regarded by many of the startups he courts. "They can relate to him because he's been in the trenches," says Cassidy, who with Lawee co-founded online gaming site Xfire, now owned by Viacom (VIA). As Google's chief dealmaker, Lawee has also earned a reputation for his fast pace. "He makes decisions quickly, analyzes quickly, and moves on it," says a former Google executive who asked not to be identified because of ongoing ties to the company. "He works in hours, not in weeks."

Watch for Acquisitions in Search

Speed is essential as companies scramble to jump-start growth and buy innovation through acquisitions. The value of all mergers and acquisitions in the U.S. tech industry surged to $9.8 billion in the third quarter, from $3.1 billion in the first quarter, and may balloon to $20 billion in the current quarter, says Rob Fisher, a partner in the PricewaterhouseCoopers transaction-services group.

Lawee says his "top priorities" are search, advertising, and mobile services, although he's casting a wide net. "We are basically looking across the entire spectrum of the Internet," says Lawee, 43. He declines to identify specific targets. But analysts and people close to Google say the company is likely focused most intently on search. "Because of increasing pressure from Microsoft (MSFT) and the fact that search is becoming a much larger category, we expect Google to become more acquisitive in the core search areas," says Sandeep Aggarwal, analyst at Collins Stewart (CLST.L).

Real-time search engines such as OneRiot scour the Web for data and messages posted in the recent past and could help make Google's search results fresher. Google recently demonstrated its interest in weaving social media more closely into search results when it said it will include Twitter updates and other social search tools in search. Bit.ly, a service that provides shortened URLs to Web users and collects data about which news stories and sites are most popular, may also be a prospect for improving Google's PageRank algorithm. OneRiot and Bit.ly each declined to comment on the prospect of selling to Google.

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