Microsoft M&A History and Trends

Among Steve Ballmer’s final moves as Microsoft’s CEO was the $7.2B acquisition of Nokia’s mobile phone business. The acquisition was Microsoft’s heftiest to date, but was just the latest in the company’s M&A history. Since 2007, Microsoft has acquired 83 companies or units, of which publicly-disclosed acquisitions have raised an aggregate $2.8B in funding over 72 rounds. Not surprisingly, 69% of these acquisitions have been in the internet and software sectors.

As can be seen below, Microsoft’s M&A pace has slowed since the start of 2010. In fact, just under half of Microsoft’s acquisitions occurred in 2007 and 2008, with acquisition activity subsequently dipping.  However, 2013 year-to-date is highlighting a resurgence in M&A activity by Microsoft with 10 deals already completed.

Peeling back Microsoft’s publicly-disclosed acquisitions from CB Insights’ M&A database reveals that 55% had received no prior venture funding. Of the 28 companies acquired by Microsoft that had received prior funding, 41% were acquired after receiving funding at the Series B or Series C stage. Just over 20% of Microsoft’s venture-backed acquisitions came at the late-stage including the $1.2B acquisition of Yammer last year.

The data highlights that Microsoft has made acquisitions across the maturity spectrum, and the average time between first funding round and acquisition by Microsoft was 4.7 years, with an average of 2.6 rounds per startup.  By way of comparison, Google acquisitions tend to be a bit earlier-stage with the average amount of time between first funding and acquisition being 3.0 years and the companies having raised just 2.1 rounds.

Not surprisingly, the majority of Microsoft’s acquisitions have been in the United States. However, the company has also acquired firms in Canada, Denmark, and Israel, among others. Microsoft’s international acquisitions have included companies like Multimap, an online mapping and location service based in the UK, and Press Play, a Danish gaming studio.

The investors behind multiple Microsoft’s acquisitions include a variety of familiar Silicon Valley VCs. Two investors, Kleiner Perkins Caufield & Byers and Intel Capital, have previously backed three Microsoft acquisitions. Interestingly, three acquired Microsoft companies participated in the 2007 or 2008 TechCrunch50 conference including Powerset, Videosurf and Yammer. Below is a list of the investors that have backed two or more startups acquired by Microsoft since 2007:

• Kleiner Perkins Caufield & Byers
• Intel Capital
• Pitango Venture Capital
• Accel Partners
• Founders Fund
• Meritech Capital Partners
• Greylock Partners
• Redpoint Ventures
• Ignition Partners
• Index Ventures
• Venrock

Note: Microsoft’s M&A group provided data featured in this research brief. Specifically, the data in the overall activity chart (bar graph #1) and the geography breakdown (pie chart #1) were provided by Microsoft M&A to CB Insights and includes publicly known as well as undisclosed transactions. The rest of the trends detailed in this research brief are based on data from CB Insights M&A database.