- Microsoft spent more than $9 billion on acquisitions during its last fiscal year, mostly attributable to its $7.5 billion purchase of GitHub.
- Analysts expect the buying spree to continue, and speculated on a few big names that Microsoft might try to buy.
- The list includes Salesforce, Twilio and Workday — though be advised that there’s no indication that anybody at Microsoft has so much as thought of buying any of these companies; this is all speculation from industry analysts.
- Also of note is that most of these companies are worth far more than the $26.2 billion Microsoft spent on LinkedIn in its biggest acquisition ever.
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Microsoft spent more than $9 billion on acquisitions during the company’s last fiscal year — mostly spent on its $7.5 billion GitHub acquisition, plus 19 other companies besides.
Analysts expect the buying spree to continue, going so far as to speculate on potential acquisition targets, including Salesforce, Twilio and Workday.
Business Insider compiled a list of the companies analysts expect Microsoft could try to buy — though it should be noted that this is all speculation, and there’s no indication that anybody at Microsoft has so much as thought of buying any of these companies.
It’s also worth noting most of the companies on the list cost significantly more than Microsoft has ever paid to acquire any company.
Microsoft’s largest acquisition to date was paying $26.2 billion for LinkedIn; Salesforce carries a market cap of some $168 billion at the time of writing. Wedbush Securities expects Microsoft to spend around $2 billion on mergers and acquisitions this year – which is too little to buy even one of the companies on this list.
But Microsoft’s rivals including Google Cloud are expected to be mulling big acquisitions to get ahead in the cloud game, which may entice the Redmond-based tech titan to open its wallet.
Here are the companies analysts expect Microsoft could buy in the coming years, including to boost the company’s multibillion-dollar cloud business:
Market cap at the time of this writing: About $168 billion
Salesforce would be an attractive acquisition, according to Piper Sandler analyst Brent Bracelin, because Microsoft has less than 5 percent market share of front-office applications — the market term for software that helps salespeople and service reps keep track of their customers, which is an area where Salesforce specializes.
Such a deal “would elevate Microsoft as the software-as-a-service alternative to Oracle, IBM, SAP and [Amazon Web Services],” Bracelin wrote in the note.
The deal, however, has a “low likelihood given sheer size of potential deal and willingness to sell,” Bracelin said.
RBC – which thinks Google, not Microsoft, will buy Salesforce – predicted the deal could be valued at as much as $250 billion in an acquisition. That would be a premium of some 70% of its market cap at the time of writing.
Market cap at the time of this writing: About $44 billion
Piper Sandler analysts suggest Microsoft could acquire Autodesk and use its architecture, construction and manufacturing software to expand the Office 365 productivity suite into more technical markets.
Market cap at the time of this writing: About $42 billion
Workday’s human resources and financial management platform is used by 50 percent of Fortune 500 companies, according to RBC Capital Markets 2020 software outlook report.
Buying Workday would “provide [Microsoft] entry into what we believe is going to be the most durable cloud growth market outside of the public cloud,” which a RBC analyst said will be cloud enterprise resource planning.
Analysts at Piper Sandler agree Workday could be a potential acquisition market as Microsoft only has less than 5 percent of the so-called “human capital management” market that Workday is in.
Market cap at the time of this writing: About $17 billion
By acquiring Twilio — which helps developers write apps that can send text messages and make phone calls — RBC Capital Markets said in its 2020 software outlook report, “Microsoft would acquire the leading developer platform for powering and embedding voice, messaging and email communication into leading consumer and business applications.
The deal would also give Microsoft “a growing community of 7 million developers and a disruptive platform that has potential product and functional synergies across the entire Microsoft product stack,” RBC analysts said.
Piper Sandler analysts agree Twilio is a potential acquisition target, writing the API platform could enhance Microsoft Azure’s developer ecosystem.
Market cap at the time of this writing: About $19 billion
RingCentral has the leading cloud-based communications platform and deals with companies such as AT&T and Avaya, according to Piper Sandler.
Microsoft, the firm said, could buy RingCentral and roll it into Office 365 bundle of productivity applications.
Market cap at the time of this writing: $13 billion
Microsoft could buy cybersecurity company Crowdstrike, RBC Capital Markets said in its 2020 software outlook report, and combined the company’s products with its own to provide security to customers of all sizes, from small businesses to large enterprises.
RBC expects Microsoft could sell the combined security product on its own or as a bundle through the company’s Office 365 cloud-based suite of productivity tools.
Microsoft’s security spending, RBC notes, has reached $1 billion annually.
Market cap at the time of this writing: About $10 billion
Coupa is the leading cloud application for business spend management, according to Piper Sandler, and Microsoft could buy the company to boost its Dynamics 365 suite of business applications.
Coupe has more than 1,000 customers, Piper Sandler notes.
Market cap at the time of this writing: About $10 billion
Zendesk is a leader in cloud customer experience applications, according to Piper Sandler, which Microsoft could acquire for its Dynamics 365 suite of business applications.
Valuation: $7.10 billion, according to PitchBook
Startup UIPath’s robotic process automation — which helps automate routine, everyday workplace tasks — could boost the Microsoft Power Platform tools for making simple apps, and bring over a base of more than 400,000 customers, according to Piper Sandler,
Business Insider’s Ben Pimentel has been reporting on changes at UiPath that include slashing hundreds of jobs and forcing out a chief financial officer who tried to rein in the company’s exorbitant spending.
Valuation: $6.28 billion
The privately-held gaming company’s real-time software development platform, according to Piper Sandler, has new potential uses in the industrial and auto industries and complement’s Microsoft HoloLens augmented reality and artificial intelligence businesses.
Valuation: $3.2 billion, according to PitchBook.
Flexport creates a specialized cloud-based application for global logistics and supply chain, according Piper Sandler, used by 10,000 customers.
The acquisition would give Microsoft a “disruptive opportunity to automate logistics workflows via cloud and AI,” according to the firm’s analysts.