Peter Kafka

Recent Posts by Peter Kafka

Yelp Is Gone–For Now–But Google Has Plenty of Fish Left to Fry

lets-make-a-dealThe Google/Yelp deal, which seemed close just a few days ago, is indeed gone, at least for now. But even if that one doesn’t go through, no need to worry. Google has plenty more in the hopper.

Just in case you didn’t get the picture yet–six deals, for about a $1 billion or so, since August, plus another $500 million one that got away–Eric Schmidt and company have their checkbook out. It’s not going away anytime soon.

Back in September, Schmidt himself announced that he was looking to do a deal or so a month, and he’s more or less kept to that pace. How long can that go on? A while, say M&A types who are trying to service the company. One banker thinks Google (GOOG) has at least six deals in the hopper. Another thinks it’s more like 10.

Whatever the number, industry sources tell me that beginning this fall, Schmidt and his proxies started sending out unusually clear and specific instructions about the kinds of companies they want.

And no, they won’t tell me exactly what they’re hunting for. And yes, this could definitely be interpreted as self-perpetuating, wish fulfillment stuff by would-be deal guys.

Still, there does seem to be a basic pattern in the deals Google has made so far. Two patterns, actually. Either it is picking up talent, regardless of the company’s success to date–a good example here might be ad optimization start-up Teracent–or it’s looking for a market leader in a market it hasn’t solved yet. That would be the smartphone ad guys at AdMob.

That also sounds like Yelp, the local reviews network Google was willing to pay some $500 million for.

So what happened? According to a source close to Yelp, the thinking is that the company is worth “substantially more” than Google’s offer, “given market dynamics.”

What exactly does that mean?

Industry sources say Yelp has always been looking at either a large funding round, which could give the founders a chance to take some money off the table, or a straight-up sale. Perhaps the Yelp guys are now willing to take investors’ money at the value Google offered, while holding on to the possibility of a bigger payday down the road.

Or perhaps they’re thinking they can extract even more from Google if they come back to the table. If so, better hope the Google guys aren’t too busy on other deals.