Three acquisition predictions

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The Daily

I love a good prediction. For it to be good, it should be specific in time, detailed, and the more unexpected the better. Scott Galloway does a great job with this. Boring predictions are vague and don’t specify a time frame. Things like “consumers will increasingly want to be part of a conversation”. That’s the kind of thing Nostradamus would have said if he was still around.

Simply because I enjoy it, I’m making three predictions myself. They’re all rumored IPOs in some capacity. I don’t think either of them will make it to the market. I don’t have any inside information or knowledge that’s not publicly available, so take it for what it’s worth.

Microsoft will acquire Unity

Microsoft have almost abandoned the consumer space over the last few years. The clearest focus areas now are Azure (Cloud) and Office 365 (Word & Excel online). But there are also other things going on. Microsoft owns Xbox and bought two new studios this past November. They now own 13 game studios in total (Mojang/Minecraft being one of the more prominent ones). Aside from this, they made a huge bet on Github in October. It fits with their focus on B2B developer tools. Also, it was a refreshingly agnostic move in how it supports more than the Microsoft coding languages of choice.

Add these two together: a belief in gaming as a growing macro + the interest in underlying B2B tools for developers. Add the bonus of the overall importance of 3D for developing AR/VR. To me, that says Unity. They are rumored to go public in 2020 but they’re not going to get there. Microsoft will pick them up before that and establish themselves firmly as a key player in the developer tools ecosystem.

Who else could it be: Adobe. Unity is not just a receptacle for code, it is a part of the workflow for creatives too. This should be in Adobe’s interest. But I think they will think it is too tech heavy and miss the opportunity.

Naspers will acquire Adevinta (part of Schibsted)

My all-time favorite media company Naspers (which arguably has very little to do with media anymore) is a gigantic player in marketplaces and classifieds already. This is a highly competitive space where the market leader has a disproportionate advantage. You’re either #1 in the market, on your way to becoming #1, or you should probably get out. A few weeks ago they looked at Avito (#1 classified site in Russia) and bought the remaining shares of it in a billion dollar deal.

Classified marketplaces don’t often go across geographic borders. This means that you can have different market leaders in neighboring countries. But as the market dynamic dictates, there’s really only room for one major player per country. This means it is the perfect field for M&A.

In September, the Norwegian media house Schibsted announced that it was splitting their operations into two. Nordic Media & Growth Companies in one company, and International Marketplaces in another (I’m oversimplifying somewhat – more exact details here). The Schibsted name will stay with the media properties, and the marketplaces will be known as Adevinta (previously MPI – Marketplaces International).

Schibsted are the classified market leaders in France, Spain, and have strong positions in several other European and Northern African markets. They already have a joint venture together with Naspers through OLX in Brazil. All in all – Adevinta will never be spun out. Naspers will buy them and become the unthreatened world leader in online classifieds. Schibsted will be an exceptionally well capitalized media company. Win-win.

Who else could it be: Ebay. But it’s very unlikely. They are a large classifieds player, but this would be out of context for how they have been operating. Naspers is the given player here.

Salesforce will acquire Zoom

Video conferencing – every company’s pet hate. The true unfulfilled promise of seamless remote meetings. Microsoft bungled Skype. It’s main selling point now is that IT-departments can have it as an integrated part of their overall MSFT software stack. Google had Hangouts, then Meet, now Hangouts Meet(?!). It’s their equivalent within the G Suite. Fair enough. But the one player that I keep hearing about – and one that is still independent (albeit with a unicorn valuation) – is Zoom.

For this to happen, Zoom needs a buyer with some specific traits. An acquisitive B2B player that is big enough to write huge checks, interested in integrating a variety of B2B services into one platform, and one that preferably doesn’t already have a good video service in place. This means it is Salesforce. They’ve already gone after document collaboration when they bought Quip a few years ago. It’s their Google Docs. They’re very acquisitive. They don’t have their own video communication service in place. Done.

Who else could it be: Dropbox. If – and this is a big if – Dropbox wants to build out their offering to businesses, then communication outside of file and document management would make sense. Both Microsoft and Google could easily do it, but that would require them scrapping their current services. Which they won’t do. So Dropbox is an unlikely wild card here.

Three IPOs that won’t happen. Three billion dollar deals coming up this year. That’s my prediction. Let me know what you think in the comments.

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  1. Pingback: The double edged sword of success: Understanding Naspers and their Tencent investment – Björn Jeffery

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