Once we study any 12 months in enterprise M&A, it’s tempting to focus on the largest, gaudiest offers — and there have been loads of these in 2020. I’ve written about 34 acquisitions to date this 12 months. Of these, 15 have been price $1 billion or extra, 12 have been sufficiently small to not require that the businesses disclose the value and the rest fell someplace in between.
4 offers involving chip firms coming collectively totaled over $100 billion on their very own. Whereas no one does eye-popping M&A fairly just like the chip business, different sectors additionally provided their very own eyebrow-raising offers, led by Salesforce buying Slack earlier this month for $27.7 billion.
We’re more likely to see extra industries consolidate the best way chips did in 2020, albeit in all probability not fairly as dramatically or expensively.
But despite the drama of those bigger numbers, probably the most attention-grabbing targets to me have been the pandemic-driven smaller offers that began popping up in Might. These small acquisitions are those which are so insignificant that the corporate doesn’t should share the acquisition value publicly. They normally contain early-stage firms being absorbed by cash-rich issues in search of some mixture of lacking expertise or engineering expertise in a specific space like safety or synthetic intelligence.
It was definitely an energetic 12 months in M&A, and we nonetheless won’t have seen the final of it. Let’s take a look at why these minor offers have been so attention-grabbing and the way they in contrast with bigger ones, whereas looking forward to what 2021 M&A would possibly appear like.
It’s at all times arduous to know precisely why an early-stage startup would hand over its independence by promoting to a bigger entity, however we are able to definitely speculate on a few of the the explanation why this 12 months’s rapid-fire dealing began in Might. Whereas we are able to by no means know for sure why these firms determined to exit through acquisition, we all know that in April, the pandemic hit full pressure in america and the economic system started to close down.
Some startups have been notably susceptible, particularly firms low on money within the April timeframe. Clearly firms fail after they run out of funding, and we began seeing early-stage startups being scooped up the next month.
We don’t know for certain after all if there’s a direct correlation between April’s financial woes and the flurry of offers that began in Might, however we are able to moderately speculate that there was. For some share of them, I’m guessing it was a fireplace sale or a minimum of a deal made below lower than supreme phrases. For others, possibly they merely didn’t have the wherewithal to maintain going below such opposed financial circumstances or the partnerships have been simply too good to cross up.
It’s price noting that I didn’t cowl any offers in April. However, starting on Might 7, Zoom bought Keybase for its encryption experience; 5 days later Atlassian bought Halp for Slack integration; and the day after that VMware purchased cloud native security startup Octarine — and we have been off and working. Granted the large firms benefited from making these acquisitions, however the timing stood out.