A Pragmatic Look at Valuation (Collection)

2. Financial Review and Pro Forma Analysis

Market View

In 2007, Microsoft purchased aQuantive, an online advertising company. At the time, the acquisition was the software giant’s largest ever. Microsoft paid $6.3 billion in cash, an 85 percent premium over aQuantive’s share price, to jump-start its online advertising business and challenge Google, which had recently purchased DoubleClick, one of aQuantive’s key competitors. The online advertising market was worth $25 billion in 2007, and it had experienced a growth of 30 percent year-on-year.

Microsoft viewed the acquisition of aQuantive as an opportunity to capture a significant share of this growing market and boost its online revenue and profit. Five years later, Microsoft announced that ...