M&A Alert - March 15, 2010
Google Acquires Online Collaborative App DocVerse
Transaction Overview
On March 5th, 2010 Google announced the acquisition of web-based Microsoft Office collaboration tool DocVerse for $25mm.
Target Description
DocVerse is the maker of a plug-in which enables real-time, simultaneous group editing within Microsoft Word, Excel and PowerPoint. DocVerse was founded in 2007 by Microsoft veterans Alex DeNeui and Shan Sinha and formally launched its services in October 2009.. DocVerse has closed one round of seed finding of $1.3mm in July 2008 from Baseline Ventures (Steve Anderson), Harrison Metal Capital (Michael Dearing), and individual investor Naval Ravikant.
Buyer Description
Google offers targeted online and mobile search advertising services to users and advertisers. Over the past several years, Google has made a substantial investment in their Google Apps offering. Google was founded in 1998 and is based in Mountain View, California. Jonathan Rochelle, Group Product Manager of Google Apps team, who wrote about this transaction on the official Google blog, was the key executive sponsor of the transaction.
Transaction Parameters
While not publicly released, the acquisition price is reported to be $25mm. DocVerse’s historical revenues are not material as the offering was launched as a free service in October 2009.
Strategic Rationale
Turnaround is fair play. Microsoft’s marketing mantra in it’s heyday was the much maligned “adopt and extend” strategy. Eric Schmidt, a veteran of the Microsoft wars of the 1990′s, is using the exact same strategy to build it’s Google Apps business. DocVerse brings a clear and compelling value proposition to users of Microsoft applications and is a rather convenient way for Google to build a direct relationship with the world-wide base of 600mm Microsoft Office users. Over time, it doesn’t take much imagination to envision a scenario where Google can provide a compelling offer for the Microsoft Office user to switch to Google’s equivalent Google Apps offering.
Architect Partners Observations
It’s hard to imagine a more compelling acquisition for Google as part of its Google Apps strategy. While Microsoft management have been making lots of speeches about coming cloud-based applications, Google is providing those applications today and providing compelling user value. In this situation, Google has everything to gain and Microsoft everything to lose.