As Yahoo falters, Microsoft becomes the M&A leader

Steven Loeb · March 4, 2016 · Short URL:

Microsoft bought 18 companies in 2015, with Google coming in second place with 16

A few years ago, Yahoo was the king of mergers and acquisitions. I mean, the company just went startup crazy. Oh, how things have changed since then.

In 2015, Yahoo barely bought anything at all, while Microsoft took the mantle, according to new data out from CB Insights.

The company compared to the number of companies bought by Amazon, Apple, Facebook, Google, Microsoft, Salesforce, Twitter and Yahoo. Some very interesting things emerged from this data. 

First, Yahoo.

As I said earlier, Yahoo spent 2013 and 2014 buying every company in its sites. That included 29 companies in 2013 and another 19 in 2014. In 2015, though, the company only bought one: style-focused community Polyvore. Terms of the deal were not disclosed. 

A big part of that extreme slow down may have something to do with the changing fortunes of CEO Marissa Mayer. In her first couple of years at the helm, Mayer was given a lot of the benefit of the doubt. As the company continued to sink, however, investors in the company started giving her a lot of regarding her leadership, with many going after the company's spending spree, which never morphed into a coherent strategy. Some shareholders have openly called for her to resign. 

In that kind of environment, it seems unlikely that Mayer would feel comfortable continuing to spend money the way she had been.

MIcrosoft, on the other hand, is where Yahoo was a couple of years ago. Satya Nadella took over for Steve Ballmer in 2014, and is still riding that tailwind. Microsoft was the one of the few that made more acquisitions than it did the the year before, with 18, up from 10 in 2014, and only 4 in 2011.

In all, it made 18 purchases, the most of any company. They included Talko, MetanautixRevolution Analytics, Equivio and Adallom.

Microsoft doesn't seem to be slowing down this year, either, having already made five acquisitions so far: Event ZeroMinecraftEduSwiftKeyGroove and Xamarin

Google was in second place last year with 16 transactions, down from a pretty extraordinary 35 acquisitions in 2014. It is the only company with more than 100 in the last five years.

Some of the companies it bought last year include PixateOysterJibe Mobile and Divshot

So far this year, Google has only purchased one company: Singapore-based communications service Pie.

Facebook made two big purchases in 2013 and 2014: first buying Instagram, and then WhatsApp. Since then, it's M&A strategy hasn't been quite as robust. It didn't make a big purchase in 2015, and it the number of companies it has bought have declined in each of the last three years, going from 14 in 2012 to 10 in 2013 to eight in 2014 and just five in 2015.

Those 2015 acquisitions were: Wit.aiQuickFire NetworksTugboat YardsTheFind and Teehan+Lax.

predict, though, that Facebook will make a big splashy acquisition this yes, by buying Slack, which will soon be the company's main competitor when it fully launches Facebook at Work this year.

Facebook at Work is the company's workplace collaboration servce. It was first released, in pilot mode, in January of 2015. Since then it has been invite only, and roughly 300 enterprise clients signed up, including Heineken, Stella and Dot, and Century 21.

Sure, there are now reports that Microsoft also tried to buy Slack for $8 billion, so it wouldn't be cheap, but Facebook did pay $19 billion for WhatsApp, so it wouldn't be unprecedented to spend that much. 

Tech M&A in 2015

Last year was a mixed bag for mergers and acquisitions, as it was the most active year on record for announced deals in the US technology sector. The number increased by a whopping 82 percent over 2014, jumping from $171.6 billion to $313.1 billion.

While that seems like good news, the numbers don't look at great when it comes to deals that actually closed, though. Only 278 transactions closed last year, totaling $147.7 billion, leaving over $150 billion, or more than half, still pending. Both the number of closed deals, and their value, actually dropped from 2014, which had seen 289 deals valued at $164.8 billion. 

The reason for all that deal value still being left on the table was due to a proliferation of megadeals, or those deals that are valued at over $5 billion.

In all, there were 10 megadeals announced during 2015, including two that closed in the fourth quarter: Intel’s acquisition of Altera and NXP’s acquisition of Freescale Semiconductor, which contributed a combined $28.6 billion in deal value. The year also included the largest technology transaction in history, with Dell buying EMC for $67 billion.

In all, 30 deals in excess of a billion dollars closed last year, with 11 of them in the fourth quarter alone. There are still another 15 such deals that are still pending. 

Interestingly, the number of big deals last year was actually a smaller percentage than it had been in 2014, 11 percent compared to 12 percent. 

Despite all of those huge figures, deals that were worth less than $100 million in value actually made up nearly half, 49 percent, of deal volumes for the year. That number is higher than it has been since 2012; in 2013 it was 46 percent of deals that were small, and in 2014 it was 45 percent.

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