To recap the rumors, it was reported last week that Microsoft was interested in acquiring DoubleClick. "DoubleClick is majority-owned by private equity firm Hellman & Friedman. A source quoted in The Wall Street Journal story last week said the private equity firm, which took a controlling interest in DoubleClick two years ago for $1.1 billion, is seeking $2 billion for the company" (B to B, April 2). Microsoft would be able to gain share in the internet advertising sector where they have been lagging behind both Google and Yahoo.
If Microsoft is able to acquire DoubleClick, what does that mean for Yahoo and Google?
For Google, it might cause an ad revenue loss of $120 million, which is nothing for a company that reported $3 billion in profits. However, if Microsoft then acquires Yahoo, as Mark Simon argues, then Google might be in serious trouble.
Since there is a faint possibility of this happening and Google is into buying pretty much everything, they have entered the rumor mill. According to the Wall Street Journal, Google and AOL are both interested with the price tag now exceeding $2 billion, for the company that is estimated "to earn $300 million in revenue this year (up from $150 million in 2006)" (Google Watch, April 2).
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Los Angeles private equity funds typically position themselves somewhere in between venture capital and IPOs. That is, they invest in companies that have started up but have not gone public. Another big activity of such funds, which is making waves, is taking public companies private. These funds buy out existing investors, including retail shareholders, delist the company, restructure it beyond recognition- and sell it onward or
often take it public all over gain.
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