One thing corporations enjoy doing with their money is acquiring other businesses in big merger and startup acquisitions (M&A) transactions. Every day in the business world, the big players are taking out their competition by purchasing them. The great majority of takeovers involve middle-market and micro-market enterprises, but often only the multi-billion-dollar purchases receive news attention.
Every year, it seems like a slew of corporations make multibillion-dollar bids to acquire their greatest rivals or the next big startup. It is impossible to predict the outcome of any business purchase. Like Facebook’s acquisition of Instagram, some have become success stories over the years. Others, like the AOL Time Warner merger, were doomed to fail. But whatever the conclusion, only a few mergers, and startup acquisitions will be remembered for altering the structure of mergers and acquisitions.
Remember that mastering the storytelling side and how you are positioning your business is critical when it comes to engaging and speeding up the process. This is done via your acquisition memorandum. This is super important to reach a successful acquisition. For a winning acquisition, memorandum template take a look at the one I recently covered (see it here) or unlock the acquisition memorandum template directly below.
Here is the content that we will cover in this post. Let’s get started.
- 1. Why do acquisitions happen?
- 2. 20 biggest acquisitions
- 3. Facebook acquires Instagram
- 4. Google buys Android
- 5. Salesforce buys Slack
- 6. eBay acquires PayPal
- 7. Google acquires YouTube
- 8. Facebook acquires WhatsApp
- 9. Microsoft acquires Skype
- 10. Amazon acquires Whole Foods
- 11. Walmart acquires Flipkart
- 12. Microsoft acquires LinkedIn
- 13. Apple acquires Beats by Dre
- 14. Uber acquires Postmates
- 15. Microsoft buys Nokia
- 16. Intel buys MobileEye
- 17. HP buys Compaq
- 18. Google buys Fitbit
- 19. Oracle acquires PeopleSoft
- 20. Facebook acquires Giphy
- 21. Microsoft acquires Minecraft
- 22. Microsoft buys Zenimax
Why do acquisitions happen?
Startup acquisitions occur for a variety of reasons; these are a few reasons why a business might choose to acquire another:
- To grow further in the future
- To diversify business interests
- Obtaining patents and technologies
- Improve the supply chain pricing power
- To put a stop to an emerging market competitor
Keep in mind that in fundraising or startup acquisitions, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
20 biggest acquisitions
1. Facebook acquires Instagram
In April 2012, Facebook paid $1B for Instagram, a photo and video sharing software. Emails made public revealed that Zuckerberg bought Instagram as it had become a threat to Facebook. Figures in June 2020 show that this was a smart move as Instagram grew by 23% and Facebook by a mere 3%. The acquisition of Instagram has intensified Facebook’s overall mobile presence.
2. Google buys Android
Google completed what we believe to be one of the best acquisitions to date on July 11, 2005. It bought a startup business named Android. Research as of January 2021 claims that Android is used in 72% of smartphones, with over 3B active users monthly. Android OS was initially designed as an operating system for digital cameras, but their focus was soon diverted when cameras on mobile phones became more popular.
Google eventually purchased this cash-strapped business for 50M and has since watched their greatest startup acquisition flourish beyond bounds. With the number of mobile users growing daily, there is no telling how much Android will grow.
3. Salesforce buys Slack
With millions of people working from home due to the ongoing pandemic, Slack has become the primary office messaging platform, and it’s grown more important than ever. Salesforce’s acquisition of Slack is a direct challenge to Salesforce’s long-time rival, Microsoft, which has had its success with the office chat application Microsoft Teams. Salesforce, the global leader in CRM, purchased Slack Technologies, Inc. in 2020 for $27.7B.
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4. eBay acquires PayPal
In June 2002, eBay paid $1.5B to acquire PayPal. It is a global eCommerce company that facilitates money transfers and payments via the Internet. Billpoint was purchased by eBay in May 1999, although the service was not completely launched until the spring of 2000. Billpoint has struggled to compete with PayPal despite aggressive marketing for market dominance. PayPal is present in over 200 markets and handles over 425M consumers.
5. Google acquires YouTube
The video-sharing site was purchased by Google in October 2006 for $1.65B from its creators, Steve Chen and Chad Hurley. Since then, YouTube has seen numerous modifications in terms of appearance, feel, and performance. In 2020 alone, YouTube had generated revenue of $19.7B.
6. Facebook acquires WhatsApp
This acquisition cost Facebook $22B in total. Most have claimed this to be a large sum to pay, but it netted more than just a massively popular internet-based messaging program; it also came with 450M members. WhatsApp now has over 1.5B users.
WhatsApp aided in boosting Facebook’s expansion in emerging regions with limited internet access. When the regulatory licensing approval was completed in October, Facebook share prices jumped to $77.56 from $68. WhatsApp generates revenue by charging a $1 per year subscription fee in a few countries with transparent carrier billing systems and strong credit card usage, generating approximately $20M in annual revenue.
7. Microsoft acquires Skype
Before Zoom, Skype used to be the number one telecommunications application. Skype is an instant messaging program and a free voice-over IP service that eBay purchased in 2005 for $3.1B. Microsoft paid $8.5B for Skype in May 2011. Skype has been preloaded on every Windows platform since then.
8. Amazon acquires Whole Foods
Amazon paid $13.4B to acquire Whole Foods, transforming the business that pioneered internet shopping into a merchant with physical branches in various towns throughout the country. This transaction demonstrates Amazon’s increased interest in the groceries market. They already own a delivery service, AmazonFresh, and are constantly experimenting with a click-and-collect approach, allowing people to buy food online and pick it up in stores.
The COVID pandemic redirected the industry’s attention to food delivery, which benefited Amazon even more. Amazon will eventually be able to adapt the grocery shopping experience to the individual based on enormous amounts of data from Whole Foods shoppers.
9. Walmart acquires Flipkart
Walmart announced the acquisition of Flipkart, India’s largest eCommerce company, for $16B, valuing the company at more than $20B, on May 9, 2018. Walmart has acquired a 77% share in Flipkart. This has put them in direct competition with Amazon India, which currently dominates the Indian market.
The agreement resulted in the largest exit for Indian private equity and venture capital investors, making approximately $14B by selling shares to Walmart. Walmart now has a significant presence in the region and has set its sights on growing the retail market there.
10. Microsoft acquires LinkedIn
Microsoft’s $26.2B acquisition of LinkedIn in June 2016 sought to expand the professional networking site and combine it with Microsoft’s enterprise tools, such as Office 365. The purchase of LinkedIn gave Microsoft instant access to over 433 million members and a solid social network. Due to its professional orientation, LinkedIn ideally aligns with the tools and services Microsoft offers.
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11. Apple acquires Beats by Dre
With the startup acquisition of Beats, Apple was able to find a previously untapped opportunity in the personal audio industry. Apple’s acquisition of Beats in 2014 was the most expensive in the company’s history. Since the late 1980s, this tech company has completed scores of acquisitions, but only a few have exceeded the billion-dollar level.
Apple now has a footing in high-end audio experiences, thanks to Beats. And it did so with a socially relevant brand and was universally regarded as stylish.
12. Uber acquires Postmates
Uber, the ride-hailing application, has acquired Postmates in a $2.65B all-stock takeover. As disclosed, the deal combines Uber’s worldwide Mobility and Delivery technology with Postmates’ company in the United States to boost food, grocery, and the delivery of other items.
Postmates and UberEats applications will continue to operate independently, aided by a more efficient merchant and delivery network. These initiatives are intended to understand retailers’ needs better and continue developing goods, services, and rules that safeguard their interests.
13. Microsoft buys Nokia
Microsoft and Nokia have a not-so-positive history. Microsoft paid more than $7B for Nokia’s mobile device business in 2013, in a poor attempt to create a third option to iPhone and Android devices with Windows Phone. It utterly failed, with the assets purchased from Nokia eventually being written off in 2015.
Microsoft has effectively transitioned away from hardware, apart from their Surface series, and toward a software, cloud, and services portfolio. The Nokia agreement is a throwback to when the corporation was constantly playing catch up in the smartphone world.
14. Intel buys MobileEye
Intel made a significant investment in autonomous vehicles and AI in 2017 when it paid $15B for Israeli self-driving technology company MobileEye. MobileEye’s computer vision, mapping technology, and machine learning are presently powering or will power Intel driver-assisted and autonomous driving systems in vehicles from Fiat Chrysler and BMW.
This agreement has provided Intel with a far broader range of the various components that go into autonomous driving systems and a number of ties with automakers.
15. HP buys Compaq
The startup acquisition of Compaq was undoubtedly one of the worst acquisitions in the history of the technology industry. HP aimed to grow rather than sell pieces. It paid a whopping $33.6B for the PC manufacturer. Even though both companies were struggling prior to the transaction’s announcement, the sale still went ahead. According to partners, a hidden benefit of the merger was that it allowed partners who wished to remain vendor exclusive to extend their line cards without having to sign up with more suppliers.
In 2013, HP dropped the Compaq brand name in the United States. Grupo Newsan, an Argentine firm, bought the brand’s license in 2015, along with a $3M investment, and created two new lines of Presario laptops for the local market over the course of the year.
16. Google buys Fitbit
Fitbit made its debut in 2007 and quickly rose to fame as a pioneer in the consumer fitness tracking sector, swiftly becoming the market leader. Google’s wear OS has struggled to dethrone Apple’s watchOS, so in 2020, Google paid $2.1B for fitness tracker favorite, Fitbit.
Purchasing Fitbit aimed to drive the competition in the fitness device wearables and offer better and more affordable devices. Fitbit’s hardware capabilities have always been excellent, providing Google with a far more substantial base to create future Android integrated wearable technology products.
17. Oracle acquires PeopleSoft
Oracle’s 2004 acquisition of PeopleSoft is a well-known source of conflict. This hostile takeover took 18 months to complete. PeopleSoft provided software-based human resource solutions for businesses and schools, and its products are still available via its current acquired company, Oracle. Oracle had stated that the acquisition would provide it with the size and heft it needed to compete effectively in the applications sector.
18. Facebook acquires Giphy
Facebook acquired GIPHY, the provider of a web-based animated gif search engine and platform, at the cost of $400M in May 2020. Giphy is a GIF library that can be integrated into other apps. Giphy has evolved into a go-to source for shareable, high-engagement content, and its animated response GIFs can be found on Facebook’s platforms as well as other social apps and services on the web.
At the time of the acquisition, Facebook’s apps, including Instagram, Messenger, the Facebook app itself, and WhatsApp, already accounted for more than half of Giphy’s traffic. Much of Giphy’s activities, including the ability for users to upload GIFs, have remained unaffected by the social media company.
19. Microsoft acquires Minecraft
In 2014 Microsoft announced the acquisition of Minecraft for $2.5B, about 20 times the profits reported by Mojang in 2013. Minecraft is a popular software on the Google Play and Apple App Store. It is also available for the PlayStation and 4 Xbox One. Minecraft is an online video game that combines Lego-style building blocks with low-fi of 8-bit graphics while being chased by monsters. It provides players with a universe in which they can explore indefinitely and build almost anything from the ground up.
Following Microsoft’s takeover, Minecraft has sold approximately 100 million copies. That alone accounts for over $1.5B in revenue.
20. Microsoft buys Zenimax
Microsoft’s $7.5B purchase of ZeniMax Media, the parent company of Bethesda, the Fallout and Elder Scrolls series developer, was completed in 2021. Bethesda was set to be run as a separate business and kept its existing leadership. In addition to Bethesda, Id Software (Doom), ZeniMax Online Studios (Elder Scrolls Online), Alpha Dog (Wraithborne), MachineGames (the next Indiana Jones game), Arkane (Dishonored), Tango Gameworks (Ghostwire: Tokyo), and Roundhouse Studios have been acquired.
Ultimately, businesses are bound to merge or acquire other businesses. When startups pose a threat to large corporations or develop a concept that other businesses become interested in, larger corporations will want to acquire these businesses. Due to startups becoming more and more creative, we will see more big startup acquisitions in the years to come.
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