The $2.5B acquisition of Mojang has been Microsoft’s largest deal since Satya Nadella took over as CEO. Acquisitions have increased since Nadella’s arrival and Microsoft has also continued their trend of annual billion-dollar acquisitions. We decided to use CB insights M&A Analytics tool to take a closer look at Microsoft’s acquisition history and how Mojang fits into their M&A strategy.
*Data used was of mergers and acquisitions that Microsoft has disclosed
Overall Acquisitions – Less deals, More Dollars
Since 2005, Microsoft has acquired 101 companies with nearly 75% of these occurring from 2005-2009. After a high of 20 companies in 2006, the number of acquisitions slowly fell to a low of 4 companies in 2010. However, the last three years indicate a possible upward trend in acquisition rate with 6 companies being acquired in 2014 already (5 of which happened after Satya Nadella took the reins).
Acquisitions by stage – companies in the midstage get acquired the most
Of the companies that receive funding, Microsoft tends to acquire companies at the Series B or Series C rounds. When we look closer at the acquired companies, about half do not have disclosed funding prior to acquisition.
Acquisition by sector – more than 2/3 of deals going to Software and Internet
Of the 35 acquisitions that Microsoft has made in the last 5 years, 24 have been of internet and software companies. The prioritization of these sectors has remained constant for the last decade. Some of the deals include:
- Yammer – Yammer is a private social network for businesses that allows users to share ideas, collaborate on projects, ask questions, find expertise, recognize coworkers, and solicit feedback. They were acquired in 2012 for $1.2B
- VideoSurf – VideoSurf has created a better way for users to search, discover and watch online videos utilizing computer vision algorithms. They were acquired in 2011 for $100M.
- Parature – Parature sells customer-service software to businesses, including Web-based customer service portals, searchable knowledge bases for common service issues, and help-desk ticket systems. They were acquired in 2014 for $100M.
Acquisition by geography – acquisitions are relatively geo-agnostic
Although California took nearly a third of US-based acquisitions in the past 5 years, this is a relatively small share compared to other large technology acquirers (nearly 60% of Google’s acquisitions were from California in this same time period). In fact, many states outside of major venture markets saw multiple acquisitions including Alabama, Washington, and Illinois. From an international perspective, more than a quarter of overall deals in the past 5 years occurred internationally, which included companies such as Skype, Mojang, and SyntaxTree.
Intel Capital is the top investor
The investor with the most exits to Microsoft is the corporate venture arm of long-time partner Intel. Intel Capital has exited 8 companies to Microsoft, including InMage Systems, Pando Networks, and Perceptive Pixel. These are the other investors that Microsoft has bought at least 3 companies from in the past 5 years:
- Intel Capital
- Accel Partners
- Kleiner Perkins Caufield & Byers
- Oak Investment Partners
- Pitango Venture Capital
- Band of Angels
- Redpoint Ventures
- Madrona Venture Group
- Mobius Venture Capital
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Photo credit to Robert Scoble