Tuesday, December 21, 2010

Companies Who Will Buy Companies in 2011

I was recently on a panel about Startup M&A / Startup Exits, and the moderator asked what companies we thought would be highly acquisitive in 2011.

Here are my predictions about companies that will buy lots companies in 2011:
  • Google.  Obviously, Google will continue to sweep up many leading technology companies.  I am guessing social, local, and ads will be areas of high activity.
  • Facebook.  Facebook will buy a company a month or more.  At a valuation of tens of billions of dollars, a $10 million buy for Facebook is equivalent to less then 1/10th of 1% of the company.  Most of these will be small team buys/asset sales.  There is some possibility FB will go for a $50 million acquisition, which would be quite atypical for them (ignoring FriendFeed, which up until now was a bit of a fluke)
  • Salesforce.  With the acquisition of Heroku, Salesforce showed a willingness to bet in a big way on a new direction.  With a market cap closing in on $20 billion and a pile of cash, Salesforce is well positioned to make a bunch of acquisitions.  I am guessing a number of cloud platforms, and social CRM companies, will become part of Salesforce in 2011.
  • GroupOn.  GroupOn will continue to take out competitors in other markets via acquisition, as well as build its technical bench via talent buys.  There is also the potential for GroupOn to buy more mobile assets.  In 2010, GroupOn acquired Qpod, Darberry, uBuyiBuy, Atlaspost, Beeconomic and many others.  Expect this trend to continue in 2011.  

Companies that will buy a handfull of companies:
  • LinkedIn.  LinkedIn bought ChoiceVendor in 2010, and has sniffed around a number of other potential acquisitions.  I expect LinkedIn to continue to make talent buys.  Intriguingly, I could imagine LinkedIn also swooping in and making a larger ($50-100 million+) acquisition if they saw strategic value in it.  I also expect LinkedIn will buy one of the many contact management and social recruiting platforms that have been emerging during 2010.
  • Zynga.  Zynga will continue to buy social gaming assets.
  • Amazon.  Amazon acquired ecommerce 1.0 market leaders Zappos and Diapers.com in 2010.  Expect them to continue to pick up assets through 2011.  Interestingly, Amazon tends to buy more of market assets / market share in key markets, rather then do a lot of small team buys like Facebook or Google. This means their acquisitions are often valued on cash flow / income projections, rather then the more semi-random variables such as "number of engineers".
  • Yahoo!.  Yahoo! will be active in 2011 and will likely take a more strategic approach to acquisitions (e.g. buying a technology asset) rather then doing pure team buys.
  • Cisco.  Cisco was surprisingly quiet in 2010.  They will continue to buy companies in 2011, but maybe at the same pace as 2010 (e.g. 5-6 acquisitions).  Thanks to labboy for the idea on hackernews.
  • Apple.  They will probably do a small number of strategic acquisitions.  Apples usually does middling acquisitions in size, but seemed to be willing to bid certain strategic assets higher with e.g. their bidding war with Google over AdMob (Google won) (Thanks to dccb)
Companies that will make their first acquisition ever in 2011.

  • Foursquare.  As its valuation will continue to grow with its user base in 2011, Foursquare will likely make one to a small number of team buys.  The company is ramping quickly and will need to balance growth with assimilating its first acquisition, always a tough thing to balance.  However, given all the attention surrounding the company, a number of entrepreneurs will be excited to exit into their arms.
  • Square.  Square is rumored to be closing a massive financing round.  This round will give them currency to make a small number of team buys through 2011.  Keith Rabois, their COO, has plenty of experience buying companies on both sides of the table.

Any companies I missed?  List them in the comments section below!

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