2 minute read / Jan 16, 2023 / exits /
The Most Acquisitive Acquihirers in Software
“The Startup M&A Market Fell 94% Year over Year - But One Segment Thrives”, a post from last week, elicited the same question from many readers.
Just who are the most active acquirers for smaller takeouts?
To answer the question. I reviewed the roughly 560 US software acquisitions under $400m since January 1, 2020.
ServiceNow tops the list with 5 acquisitions. Alphabet ingested 4 companies. So did Medallia. Most of the other top 25 buyers, including Splunk, Apple, & VMWare, closed the period with 3 M&A events, about one annually.
Examining the data by dollars reveals Motorola spent $800m, more than double the average across this group. Alphabet bought $400m of startups & Apple $375m.
Recruiter.com prefers small acquisitions: 4 purchases during the period, totalling less than $12m in value.
How does willingness to pay vary by acquirer? CrowdStrike, Alphabet, & Motorola have paid about $3m per employee, roughly twice the median.
|Percentile||M&A Value per Employee, $m|
The rule of thumb has hovered at $1m per person in the past. Perhaps inflation seeped into this market just as much as groceries & gas.
Despite the macroeconomic challenges, the M&A market has persisted at roughly constant pace.
453 distinct acquirers each spent $50m annually on smaller acquisitions over the last three years, providing on $10-20b of liquidity to founders, employees, & investors each year.
|Year||Number of Acquisitions||Average Value, $m|
The acquihire / small value part of the acquisition market remains an essential component of Startupland’s model. Small acquisitions provide liquidity, help incumbents staff new initiatives, & continue the forward progress for the ecosystem.