Acquire Something That You Need

One major reason for an acquisition (as I see it) is to “acquire” something that you don’t already have.  When analyzing Idealab’s inclination to acquire a company, the question then becomes, what don’t they already have?

Well, only they would know best of course!  But, I can take some educated guesses.  Since Idealab generates their own company ideas internally, I imagine they are in no short supply of ideas.  This rules out the acquisition of smaller companies for the purposes of R&D.  Idealab’s business model basically accounts for this already.

Perhaps they need more money to invest in more, or more expensive, endeavors?  Publicly available estimates of Idealab’s yearly revenue puts them at $10-15M per year.  This is well above the average for a company of their size (approximately 100 people).  It also leaves Idealab with plenty of money to invest into new ventures, so I doubt money is their main concern either.

I think a good guess may have to do with Idealab’s career page.  After all, companies also hire people for things they need!  A quick glance through their open positions at the time of this posting shows that they are hiring for a variety of roles across industries, from software control engineers to chemical process engineers to tourism sales associates.

This tells me that Idealab might benefit from acquiring a small recruiting firm if they don’t already have one.  I think that the ideal match would be a firm that has plenty of experience placing startup talent across a wide variety of industries.