History will not tell a happy tale when the year of 2020 is considered. In living memory this has been one of the most traumatic years that many of us will ever have faced, or are hopefully likely to face again. For a large percentage of the population, it will be remembered as a year the world stood still.
Yet for big business some things carried on as normal; indeed, many prospered. Niche companies suddenly became cash cows, while big tech and other multinationals began snapping up new acquisitions.
This article sets out to look at some of the major acquisitions of 2020.
1. Salesforce and Slack
I have followed the fortunes of Slack since their founding in 2009. Over the years, I have written quite a few articles and reviews of their platform. In many ways it seems like we grew up together, and now they have really shown their true worth.
In December of 2020, Salesforce completed its acquisition of Slack for a whopping $27.7 billion in cash and stocks. It doesn’t seem that long ago that Slack was suffering. A public launch in 2019 had not gone as well as planned, and the marketplace they were operating in had become saturated. Despite a large and growing customer base the company was struggling to make money. Increasing competition from the likes of Zoom, Microsoft Teams, and a host of other startups was taking its toll. Despite revenues of close to $850 million, the company wasn’t making money and the market wasn’t persuaded: at one point their stock was down by 40%.
And all this was occurring in a market where working from home had become the new norm and their product was one of the great facilitators of this. There is no doubt that with a turnover of such amount, there is profit to be made and Salesforce had obviously recognized this.
2. Just Eat swallows GrubHub
Two of the big players in the burgeoning takeaway food order and delivery sector have become one, with Just Eat’s purchase of its American counterpart GrubHub. GrubHub had itself been quite greedy on the acquisition front and had grown to become the American market leader in its niche. Just Eat was the European market’s leader in the same niche.
Since the acquisition, they have become the world’s largest food delivery outside of China. Uber was already considering a takeover of GrubHub when Just Eat stepped in and completed an all-stock deal worth $7.3 billion dollars.
With many people locked down across the world and takeaway food replacing a night out in a restaurant, this is definitely going to be a sector that continues to grow. Recent trends due to the pandemic have largely fueled this growth and while this may signify a slight turndown in fortunes as the world recovers, a stronger customer base and learned habits have cemented their niche.
3. Uber and Postmates
Not to be outdone by Just Eat’s acquisition of GrubHub, and in recognition of what is a rapidly expanding sector, Uber completed the acquisition of another large food delivery service, Postmates. The deal, worth $2.65 billion, was instigated in July 2020 and Uber announced the completion of the deal in December 2020.
There is definitely a synergy between the two niches that Uber obviously feel they can take advantage of and with their unfruitful approaches to GrubHub, it is an area they have been keen to expand into.
4. Facebook buys Kustomer
Only having started in 2015, Kustomer has built a reputation as one of the top Customer Relation Management platforms. For Facebook to pay $1 billion for such a recent startup speaks volumes about how the platform has progressed and how seriously they are about integrating a CRM system into its existing platforms.
With a huge amount of business now taking place through Facebook platforms like Facebook itself, Instagram, WhatsApp and even Messenger, Facebook has been keen to build more CRM into their existing platforms. This merger is seen as their first serious foray into a more integrated and seamless CRM system being built into their existing platforms.
5. Morgan Stanley and E-Trade
Morgan Stanley is a ‘traditional Wall Street Investment Bank’ that has now made the move into the burgeoning ‘digital traders market.’ In many ways, this shouldn’t be a surprise; with the purchasing power of millions of ‘low-flyer’ online investments beginning to match its traditional ‘high-flyer – high investment’ market, this merely cements its market position as a leading Investment House.
E-trade has 5.2 million customers that will now benefit from the Blue-Chip expertise that Morgan Stanley has in abundance. With a $13-billion price tag, this has been described as the biggest bank takeover since the financial crisis of 2008.
6. Zoom Buys Keybase
Without a doubt, Zoom’s business flourished during the pandemic. From being a niche bit of software that few people had heard of, it became the go-to tool for those locked down and working from home, and for those keeping in touch with family and friends they were no longer able to visit.
However, throughout the year, they were dogged by concerns regarding the security of their platform. The acquisition of Keybase for an undisclosed sum was seen as the major step that Zoom had taken in its ’90-day plan’ to bolster its security systems.
This is the first acquisition in Zoom’s nine-year history and what it shows is their commitment to becoming one of the biggest and most secure video-conferencing suites. With Keybase integrated into their systems, full end-to-end encryption is now a feature of Zoom.
7. Intuit and Credit Karma
Finally, the accounts giant Intuit, maker of software packages like QuickBooks, TurboTax and Mint, announced in February that it had agreed terms to purchase the credit history firm Credit Karma for $7.1 billion.
This signifies a step toward the general consumer market for Intuit, who hopes to be able to offer a personalized financial assistant service to help people take control of their finances and have tailored financial solutions at their fingertips.
Conclusion
2020 was a remarkable year for acquisitions despite the global pandemic. The few that we touched upon are just the tip of the iceberg. With all this taking place in a world where much business has remained stagnant, it bodes well for a brighter future when the pandemic begins to ease.
What are you favorite 2020 acquisitions? Let us know in the comments!
This article originally published on GREY Journal.
