Google-Yelp Deal Now Off

180 degrees . . . apparently Google is not buying Yelp. Something changed over the weekend and Yelp rejected Google’s $500+ million offer.

As I wrote last week: When Money’s on the Table, Take It. While many Yelpers — and the rest of the local ecosystem — many not have liked the idea of a Google-Yelp combination, you don’t say “no” to this kind of money without a very concrete alternative plan. Everyone from the VC-investors to the company executives want an exit.

We haven’t heard the full story yet, but there’s a great deal more here going on than simply “walking away.” We’re probably talking about one of two alternative scenarios:

  • Another buyer or major investor will be announced
  • Yelp has decided to pursue an IPO (perhaps with a major investor to provide additional cash to get it to $100 million in revenues)

What do you think happened?

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6 Responses to “Google-Yelp Deal Now Off”

  1. Jeff Pester says at

    My guess is that they were able to raise another round of cash equal to or higher than the valuation implied in the Google bid. They get their valuation, retain control, and leave the door open to an IPO or acquisition at a higher price down the road.

  2. Greg Sterling says at

    Logical bet. However to get that higher price they’ll have to grow revenues quite a bit and/or continue to gain on the consumer side. It’s a big risk however.

  3. Jeff Pester says at

    I honestly wouldn’t be surprised to see that Digital Sky Technologies (the Russian firm behind the latest investment in Facebook & Zynga) dumped $100 Million in their lap. But if not DST, I’m pretty sure they have one or more parties lined up with at least $100 M in fresh cash. Maybe someone along the lines of your earlier guess, in the form of AT&T?

    That said, Yelp is not invulnerable in their space. While they’re arguably the leader their penetration outside of top tier cities isn’t anything to write home about. IMO, Google still has the ability to make another acquisition in the space and emerge as a monster competitive threat. Yelp investors may end up wishing they had taken the $$.

  4. Richard says at

    Could be similar to Twitter’s deal – all the search engines promise to pay money for better access to the data? If I were MS, that’s what I would have tried to do. It stops exclusivity and costs you less than an outright purchase.

  5. Malcolm Lewis says at

    VCs sometimes allow execs to sell some of their stock when raising a new round. That allows the execs to take some money off the table and still swing for the fences. Perhaps that’s what happened here. We’ll find out soon enough. Personally, I agree with you Greg – one in the hand is usually worth two in the bush.

  6. Perry says at

    I’ve always thought this would be the killer acquisition for Facebook.

    Whoever made a play had to be putting cash on the table to get founder support – once you can taste a cash exit, a stock-centered deal won’t likely fly.

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