Are startups acquiring other startups at a faster rate? According to CB Insights data, private VC-backed US tech companies are on pace for just over 280 acquisitions, with 225 already acquisitions in 2014 (we’ve assumed current run rate continues). Although the market for startups is frothy, this actually doesn’t represent an increase in acquisition activity as startups acquiring startups has been relatively range-bound over the past few years.
Of those deals with disclosed valuations, median valuation for the acquired companies have risen each year since 2011 to a high of $34M in 2013. Thus far 2014 has largely kept pace with a $32M median valuation for acquired companies. The dramatic increase from 2012-2013 could correlate with the larger check sizes in tech.
Social companies acquire most often
Social companies have acquired most, with over 90 acquisitions since 2010. Notable acquirers within the space include many of tech’s top public companies today, including Facebook and Twitter (who each acquired over 25 companies while private), as well as private companies such as Pinterest.
Advertising, Sales, & Marketing companies were second with just over 70 acquisitions since 2010. UberMedia and Sprinklr have been among the most active acquirers within this sub-industry. Sprinklr being the most active as late, with acquisitions of Branderati and Dachis Group among others in 2014.
IPO-bound companies are most acquisitive
Unsurprisingly, the top 4 private VC-backed acquirers since 2010 are all companies that went on to go public. Facebook was number 1, having acquired 29 companies prior to its IPO, while Twitter and Zynga rounded out the top 3 with over 20 acquisitions each, also prior to their public offerings.
Thus far in 2014, IPO candidate Dropbox has been the most acquisitive with acquisitions of Predictive Edge Technologies, Parastructure, and MobileSpan, among others. Automattic and Handy are among the other companies to round out the top 3.
|Company||# of Acquisitions as Private Company|
For more data about private company M&A check out the CB Insights Venture Capital Database. Sign up for free below.If you aren’t already a client, sign up for a free trial to learn more about our platform.