Search Engine,Inc.: Growth Versus Exit Strategy for a Mature Tech Start-Up

Abstract

This case is about an information technology start-up that has grown into a global tech company in 10 years with revenue growth of 35.4% from 2008 to 2011. However, during that same period, four major competitors were acquired by integrated search providers like Microsoft and Oracle. These firms integrate enterprise search into broader information services like data mining, analytic, and predictive services. This case enables students to role-play as a consulting team hired by Search Engine, Inc.’s Board to assess the company’s strengths and weaknesses relative to its changing competitive environment and to evaluate whether industry consolidation should be viewed as a threat to its long-term viability or as an opportunity for further growth. If the team recommends selling the company, it needs to identify a potential buyer who would benefit the most from synergistic effects of acquiring their technology, talents, and clients. If the team recommends a growth strategy, it has to specify whether the company should grow within the specialized search market or compete in the integrated search market and whether to finance such growth with private equity or with an IPO. Whether a growth or exit strategy is recommended, the team needs to come up with a fair market valuation.