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from the bankers-replaced-by-a-toothbrush dept.
When deciding whether Google should spend millions or even billions of dollars in acquiring a new company, its chief executive, Larry Page, asks whether the acquisition passes the toothbrush test: Is it something you will use once or twice a day, and does it make your life better?
The esoteric criterion shuns traditional measures of valuing a company like earnings, discounted cash flow or even sales. Instead, Mr. Page is looking for usefulness above profitability, and long-term potential over near-term financial gain.
Google’s toothbrush test highlights the increasing autonomy of Silicon Valley’s biggest corporate acquirers — and the marginalized role that investment banks are playing in the latest boom in technology deals.
Many of the biggest technology companies are now going it alone when striking large mergers and acquisitions. Companies like Google, Facebook and Cisco Systems are leaning on their internal corporate development teams to identify targets, conduct due diligence and negotiate terms instead of relying on Wall Street bankers.
(Score: 1, Informative) by Anonymous Coward on Monday August 18 2014, @07:28PM
I thought for certain he was making a relationship comparison. This company is great! They're the best company in the world! I want to spend all my time with this company!
Can I keep a toothbrush at your office?
Woah woah woah, maybe we should slow down this merger a bit.
(Score: 2) by VLM on Monday August 18 2014, @09:41PM
Yes I was thinking along the same lines and at first glance thought it was some weird analogy about the two CEOs sharing a company is like sharing a toothbrush or something like that.
Or would you trust the other CEO not to use your toothbrush to scrub his toilet bowl.
Any of our interpretations would have made for a more interesting story.