Acquisitions by large tech companies are on track for the fourth consecutive yearly slow down.
A few years ago, tech giants were scooping up companies at a fast clip, with acqui-hires emerging as one of the predominant trends. But recently, mergers and acquisitions by big tech companies such as Microsoft, Salesforce, and Facebook have slowed, and are on track to decrease for the fourth consecutive year.
Exits by tech startups are also down, as noted in our recent 2016 Global Tech Exits Report. There were approximately 3350 tech exits in 2016, down 4% from 2015.
We used CB Insights data to analyze the M&A activity of some of tech’s largest players and most active acquirers. Combined, these companies have acquired 444 startups since 2013.
The companies we looked at are:
*Transactions involving more than one acquirer were not included in this analysis. We excluded telcos from our analysis.
Through the first half of 2017, these top tech companies have only made 35 acquisitions. At the current rate, this group would be on track to make approximately 61 acquisitions through the end of the year, a 25% drop from 2016 numbers. The rate of acquisitions has slowed steadily every year since a peak of 119 in 2013. Here is the deal search to see the line by line data.
Looking at these companies individually, we found that more than half have pulled back on M&A deals in 2017 year-to-date compared to the previous year. Some key takeaways below.
- Four tech companies are bucking the downward trend: Amazon, Apple, Cisco, and Microsoft are on track to make more acquisitions this year than 2016 at the current rate.
- A lot of the recent focus for companies has been in the artificial intelligence space, with the largest being Intel’s $15B+ acquisition of Mobileye. Logged in subscribers can see all the AI acquisitions with this deal search.
- Amazon has had an aggressive M&A strategy in 2017. The company has already made 7 M&A deals in the first half of 2017, more than the total for 2016 acquisitions. These deals have also been sizeable, with Whole Foods topping the list at $13.7B, followed by Arab e-commerce company Souq for $580M. We delve deeper into this acquisition strategy in our Amazon teardown.
- Yahoo’s 2013 – 2014 acquisition spree ended abruptly in 2015, a year that saw only 1 acquisition (online fashion platform Polyvore) as the company saw increasing challenges.
- Like Yahoo, Twitter had a strong 2013 – 2014 acqui-hire spree that has since stopped. The company has yet to make an acquisition this year, and like Yahoo, has faced difficulties recently as a public company.
- Apple has made AI a clear priority in its acquisition strategy. Since acquiring Siri in 2010, the company has made several other speech acquisitions in recent years, including Vocal IQ and Novauris Technologies. The company has also made key acquisitions in the AR/VR space, including facial recognition companies Emotient and Faceshift. We dive deep into Apple’s M&A strategy here.
- Microsoft ramped up M&A activity every year from 2012 – 2015. It slowed in 2016 with 10 deals, though that included Microsoft’s $26B acquisition of LinkedIn. Microsoft has already acquired 7 companies this year.
- Facebook made one disclosed acquisition this year through July 27, acquiring content rights management company Source3, presumably to bolster its platform as an attractive place for content creators. (On July 31, Facebook additionally acquired AI assistant Ozlo.) The company made double-digit acquisitions from 2013 – 2014, but slowed in the following years. In 2016, the company made 2 acquisitions in the machine/robotics space, Zurich Eye and Nascent Objects.
- Google has been the most active of all the tech companies we analyzed, making just under 100 acquisitions since 2013, including more than 35 acquisitions in 2014 alone. For more information, view our real-time feed of Google’s acquisitions here, or see our teardown about Google’s acquisitions strategy.