As reported on Inc.com:
It’s been a head-scratchingly prolific year for the flow of money in Silicon Valley and the grander startup ecosystem. With funding deals breaking all expectations, many IPOs hitting their targets despite a global pandemic–or perhaps with help from it–it’s no surprise that companies have continued to pursue the exit strategy of acquisition. Deal flow was down slightly from 2019, and certainly from 2018–but still, some very notable mergers and acquisitions weren’t hindered by the economic uncertainty brought on by the Covid-19 pandemic.
Some of the biggest deals took place between companies that are already public–such as Salesforce’s $27.7 billion mega-acquisition of Slack, which had gone public in 2019. Uber seemed keen to buy already-public Grubhub–but then in July, European take-out giant Just Eat Takeaway swooped in, acquiring it for $7.3 billion and creating the largest food-delivery company outside of China. Then there was the biggest deal of the decade, in which SoftBank agreed to sell its U.K.-based chipmaker, Arm Software, to Nvidia in a $40 billion deal in September.
The big deals certainly weren’t limited to hefty public companies though. Here are the year’s most notable deals by private companies on Inc.’s radar.
Visa Pays Cash for Plaid
In the first major deal of the year, Visa announced in January it would be acquiring fintech startup Plaid. The San Francisco-based upstart had been founded with the goal of “making the financial system a bit better, one developer at a time,” as its co-founder, William Hockey, wrote. The Emory University business and computer science grad teamed up with Zachary Perret, a colleague at Bain, in 2013 to build Plaid. The startup’s network uses an identity layer so users can securely connect their financial accounts to other apps such as Acorn or Venmo. The $5.3 billion cash acquisition doubled the company’s most recent valuation, of $2.65 billion, from December of 2018.
Intuit Joins Forces With Credit Karma
In January 2019, Credit Karma was valued at $3.5 billion–the sixth-highest valuation in all of fintech. By February of 2020, Intuit was knocking on its scrappier rival’s door to offer more than double that. Credit Karma, which was founded in 2007 by Kenneth Lin, Ryan Graciano, and Nichole Mustard, made its name by offering free credit reports. Perhaps its free alternative digital tax filing system was more in the sights of Intuit, though, as the parent of QuickBooks, Mint, and TurboTax. But when the Department of Justice cleared the companies for the merger in November, it required Credit Karma to sell its tax business to Square. The Intuit deal netted Credit Karma $3.4 billion in cash, and $4.7 billion in stock and equity.
Verizon Finds a Fit With BlueJeans
Just one month after Covid-19 was declared a pandemic, and office workers in much of the world began regularly reporting to their personal laptop for work, Verizon announced it had agreed to buy an enterprise video-conferencing company, BlueJeans. Founded in 2009 by Krish Ramakrishnan and Alagu Periyannan, a former tech lead at Apple, BlueJeans has the goal of making “video conferencing as comfortable and as causal as your pair of jeans,” according to chief commercial officer Stu Aaron. The deal was reported on April 16, for less than $500 million. Verizon sought to integrate BlueJeans into its existing tools–and is eyeing integrations into its 5G roadmap.
Facebook Acquires Giphy
In early 2016, Adam Leibsohn, Giphy’s chief operating officer, referred to making money as something Giphy shouldn’t yet be “spinning our wheels doing.” But by 2018, Leibsohn told Inc., he and the rest of the team questioned: “Now can it be a business?” Giphy, a darling of New York City’s Silicon Alley founded by Alex Chung and Jace Cook in 2013,began working with brands on custom content–essentially, gifs as brand messages. With integration into Instagram and the Facebook family of apps accounting for roughly half of Giphy’s traffic, it didn’t seem surprising when on May 15 news broke that Facebook would be acquiring Giphy for a reported sum of $400 million. The deal, coupled with another major 2020 acquisition (see below), could heighten regulatory scrutiny of the massive social network.
Amazon Hails Zoox
Amazon broadened its already keen interest in the self-driving car space by announcing in June it was acquiring Zoox for $1.2 billion. The Foster City, California, autonomous vehicle maker was founded in 2014, and had raised more than $800 million to target the robo-taxi market. Named for the colloquial name for a single-celled dinoflagellate, Zooxanthellae, due to the organism’s dependence on renewable energy, Zoox focuses on electric vehicles. The company is no stranger to controversy: In 2018, its co-founder and CEO Tim Kentley-Klay was abruptly fired by the company’s board. Reasons are hazy, but appear more likely to be due to personality than any specific incident. And earlier this year Zoox settled with Tesla after admitting new hires were in possession of Tesla documents. Still, under Amazon, it has retained its roadmap, and unveiled its electric room-on-wheels driverless vehicle in December.
Uber Gobbles Up Postmates
In June, as food ordering continued to increase through the pandemic, Uber was sidelined in acquisition talks with Grubhub when European take-out giant Just Eat Takeaway stepped in. But just a month later, Uber announced it was acquiring Postmates in a $2.65 billion all-stock deal. Bringing together two of the biggest food-delivery companies in the U.S. was expected to trigger regulatory scrutiny; the Department of Justice approved it in November.
Adobe Acquires Workfront
Founded as AtTask by Scott Johnson in 2001, project-management software maker Workfront changed its name in 2015 and moved to a new headquarters. Operating in a competitive space alongside the likes of Asana, Monday.com, and Trello, the 1,000-employee, Lehi, Utah-based company did $230 million in revenue in 2019. This year it caught the eye of Adobe, which announced in November it intended to acquire Workfront for $1.5 billion.
Facebook Snaps Up Kustomer
Founded in 2015 in New York City by serial entrepreneurs Brad Birnbaum and Jeremy Suriel, Kustomer has a customer-relationship management platform that specializes in high support volume. Perhaps it was built to sell: The pair had been through an acquisition before with their company Assistly, which Salesforce bought for $80 million in 2011. Facebook recognized its need to talk to customers across a variety of digital channels, and executives said in a statement in late November: “More people will benefit from customer service that is faster, richer and available whenever and however they need it, whether it’s phone, email, web chat or messaging.” That capability is worth a lot to the social network: The deal, which has yet to close, is estimated at $1 billion.
Author: Christine Lagorio-Chafkin
Date: 2020 12 22
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