Google should buy the Nasdaq

There. I said it. And it's actually pretty obvious when you think about it. Google is in the business of aggregating huge amounts of information -- taking billions of incremental data from myriad sources, weighting each datum relative to the importance of the provider, and delivers a marvelously simple result. Nasdaq, by contrast... well, does exactly the same thing in a different way. Of course, they're drastically different companies -- but it's a difference of implementation; what they do is, in the end, exactly the same thing.

Why should Google buy?

1) It's cheap. Nasdaq trades at 46 times earnings, compared to Google's multiple of 71. They're both lightning-fast growers -- and in each case the growth happens pretty naturally as they improve what they do and take advantage of network effects, rather than because of new services. Nasdaq's total market capitalization is about one fortieth that of Google; it's a pretty major buy, but unlike many of Google's other acquisitions, Nasdaq has already established customers, a business model, and consistent profits.

2) It's timely. Nasdaq has been knocked around by general market weakness -- nothing like making all of your money from the ebb and flow of trades and IPOs to make your stock price sensitive to general conditions. On the other hand, the company has been growing like crazy; revenue more than doubled for this year compared to last year. Nasdaq is basically a gatekeeper for startups that don't get swallowed by Google or another tech giant, so as the economy continues to grow and small companies continue to prosper, it's in a good position to keep on growing.

3) It's -- shudder -- synergistic. A Google buyout and an IPO are the two best-case scenarios for most Internet-related small companies. What could be better than showing up at a meeting and getting a direct cost-benefit comparison of each -- from someone who could make either one happen? It's not enough to cause antitrust attention (their target market is probably the best-managed 1% of the best thought-out 1% of startups), but it's a great way to have a unified exit strategy for private companies.

4) They can share; they can grow. Consider what happens when Google's algorithms and Google's cash on hand meet up with Nasdaq's accumulated trading data. This combination could be an incredibly powerful market-maker and quantitative trader, while the combination of Google's and Nasdaq's hardware (they are, probably, two of the three most reliable computer systems in existence -- I can imagine the DoD having slightly more robust computer networks, but only barely) would be unimaginably powerful. A Google/Nasdaq combination could launch an incredible array of financial products and hedging instruments, and maintain a permanently liquid market for all of them.

5) It just fits. The company that revolutionized searching; the company that revolutionized investing. Google and Nasdaq are two of the most exciting companies around, and they'd be a great combination.

Full Disclosure: I own shares of NDAQ. I bought a long time ago; I held on at $46, so I'm not selling any time soon.