Google Square: Acquisition Plan
Section 1.01 Executive Summary
This document describes the acquisition of mobile payment software company Square Inc. by Google. The mobile payment industry is one of the fastest growing industries today, with transactions up 60% from last year. Square has established itself as an industry leader within the US, with sales of $110 billion last year. This acquisition would help position Google to capture a significant piece of the estimated $240 billion industry, and Square would strengthen Google’s Wallet division by introducing related technology that could run on more than just Sprint’s limited network. In our report we will complete a SWOT analysis for making this acquisition and look at competitors within the mobile payment industry to both Google Wallet and Square. Our two business valuations using discounted cash flows of Intuit’s GoPay segment, and a relative valuation of Square to the mobile application industry based on revenues gave us similar figures of $1.65, and $1.619 billion dollars. Given these figures, we conclude the highest price Google will pay for Square is $2 billion dollars. Given Google’s large $49 billion cash on hand, and proven track record of having acquired 109 companies, Google has the capabilities managerialy and financially to succesfully complete this acquisition. This would be a friendly takeover if carried through, with a timeline of events for the acquisition listed below.
Section 1.02 Mobile Payment Industry
Mobile payment generally refers to payment services managed or executed using mobile devices. The demand for mobile credit card management has accelerated rapidly. The mobile payment industry is expected to collect over $171.5 billion in transactions this year, a 60% rise from 2011. The overall industry players can be broken into three separate categories based on focus: on-line payment services, digital wallet consolidation, and mobile point-of-sale (POS) credit card processing. Section 1.03 Square
Square
This document describes the acquisition of mobile payment software company Square Inc. by Google. The mobile payment industry is one of the fastest growing industries today, with transactions up 60% from last year. Square has established itself as an industry leader within the US, with sales of $110 billion last year. This acquisition would help position Google to capture a significant piece of the estimated $240 billion industry, and Square would strengthen Google’s Wallet division by introducing related technology that could run on more than just Sprint’s limited network. In our report we will complete a SWOT analysis for making this acquisition and look at competitors within the mobile payment industry to both Google Wallet and Square. Our two business valuations using discounted cash flows of Intuit’s GoPay segment, and a relative valuation of Square to the mobile application industry based on revenues gave us similar figures of $1.65, and $1.619 billion dollars. Given these figures, we conclude the highest price Google will pay for Square is $2 billion dollars. Given Google’s large $49 billion cash on hand, and proven track record of having acquired 109 companies, Google has the capabilities managerialy and financially to succesfully complete this acquisition. This would be a friendly takeover if carried through, with a timeline of events for the acquisition listed below.
Section 1.02 Mobile Payment Industry
Mobile payment generally refers to payment services managed or executed using mobile devices. The demand for mobile credit card management has accelerated rapidly. The mobile payment industry is expected to collect over $171.5 billion in transactions this year, a 60% rise from 2011. The overall industry players can be broken into three separate categories based on focus: on-line payment services, digital wallet consolidation, and mobile point-of-sale (POS) credit card processing. Section 1.03 Square
Square