2021 Top 10 Enterprise M&A Deals: A $121B Overview

Enterprise M&A Activity in 2021: A Review

The year 2021 witnessed significant movement in enterprise mergers and acquisitions. When aggregated, the top 10 deals reached a total value of just under $121 billion.

Notably, Oracle’s acquisition bid for Cerner stood out as the largest enterprise deal of the year. This occurred while this analysis was being prepared.

Deal Dynamics and Regulatory Hurdles

Initially, the Zoom-Five9 agreement for $14.7 billion was poised to be the third-largest deal. However, it ultimately fell through due to a decline in Zoom’s stock value following the pandemic-driven surge.

Microsoft’s proposed acquisition of Nuance Communications, the second-largest deal, currently faces scrutiny from U.K. regulators. Concerns center around potential monopolistic power within the healthcare sector.

The U.K.'s decision is crucial, mirroring the fate of Visa’s $5.3 billion acquisition of Plaid. That deal was abandoned after U.S. authorities initiated legal action to prevent it.

Comparison to Previous Years

Last year’s total M&A value reached an impressive $165 billion. This figure was largely driven by four substantial consolidation deals within the chip industry, exceeding $100 billion in combined value.

This year’s activity is more diversified, encompassing over 20 deals valued at more than $1 billion. Many other significant transactions didn't even make this top 10 list.

In 2019, the three smallest deals on similar lists were all under $2 billion. This year, the smallest deal included was valued at $5.4 billion, demonstrating increased deal sizes.

Private Equity and Security Focus

It is important to note that private equity firms were involved in four of the ten largest deals. This highlights their continued strong presence in the M&A landscape.

A considerable focus was placed on acquiring established security companies throughout the year.

Selection Criteria and Excluded Deals

Determining which deals to include on this list required careful consideration. Several large transactions were excluded due to their focus on consumer-facing businesses.

The $29 billion Square-Afterpay merger and the $14 billion McAfee deal were among those excluded for this reason.

Deals falling outside the primary coverage area were also omitted. This included the Hitachi-Global Logic deal ($9.6 billion) and the Panasonic-Blue Yonder deal ($7.1 billion).

The KKR-Cloudera acquisition ($5.3 billion) and the Cisco-Acacia deal ($4.5 billion) narrowly missed inclusion on the list.

Top 10 Deals of 2021

The following represents the top 10 enterprise M&A deals of 2021, presented in ascending order of value.

Clearlake-Quest Software Acquisition: A $5.4 Billion Deal

A significant transaction in the cybersecurity landscape occurred with Clearlake Capital's purchase of Quest Software for $5.4 billion. The seller in this deal was Francisco Partners, another private equity firm.

Details of the Acquisition

This acquisition marks one of the initial moves by private equity firms to acquire established security businesses. Quest Software, encompassing products like One Identity and OneLogin, has experienced several ownership changes throughout its history.

Despite these transitions, Quest maintains a robust business operation. Francisco Partners realized a substantial return on their initial investment of $2 billion made in 2016.

The deal highlights the continued interest in the cybersecurity sector and the potential for profitable returns through strategic acquisitions. It demonstrates the value of established security product suites, even after periods of ownership change.

One Identity and OneLogin, key components of Quest’s portfolio, are expected to benefit from Clearlake’s investment and strategic direction.

9. Permira's $5.8 Billion Acquisition of Mimecast

Within the realm of private equity investments, Permira recently completed the acquisition of Mimecast, a London-based firm specializing in email security. The transaction, finalized earlier this month, was valued at $5.8 billion.

A key factor driving Permira’s interest was Mimecast’s substantial customer base, encompassing nearly 40,000 organizations. Notably, approximately half of these customers currently utilize Microsoft Office 365 products.

Strategic Rationale Behind the Deal

Permira was attracted to Mimecast’s established presence in a significant market. The company’s existing client portfolio offered a strong foundation for future growth and expansion.

The prevalence of Microsoft Office 365 among Mimecast’s users also presented a strategic advantage. This indicates a strong alignment with a widely adopted platform, potentially facilitating further integration and service offerings.

Key Highlights of Mimecast

• Large Customer Base: Nearly 40,000 customers globally.
• Microsoft Integration: Approximately 50% of customers utilize Microsoft Office 365.
• Focus Area: Specialization in email security solutions.

This acquisition underscores the growing importance of cybersecurity, particularly in the domain of email communications. Permira’s investment reflects a confidence in Mimecast’s ability to continue providing essential security services.

8. Ericsson’s $6.2 Billion Acquisition of Vonage

Prior to Thanksgiving, Ericsson, a long-established networking firm, pursued a strategy of modernization through acquisition. The company finalized a $6.2 billion deal to acquire cloud communications provider Vonage.

Although Vonage initially gained recognition for its Voice over Internet Protocol (VoIP) offerings, the company had broadened its scope to include communications APIs in more recent times.

This expansion into API technology proved particularly attractive to Ericsson, influencing their decision to proceed with the acquisition.

Strategic Rationale

Ericsson’s purchase of Vonage represents a move to enhance its capabilities in the cloud communications sector.

The integration of Vonage’s technologies is expected to allow Ericsson to offer a more comprehensive suite of services to its customers.

Specifically, the acquisition aims to bolster Ericsson’s position in areas such as CPaaS (Communications Platform as a Service).

Vonage’s Evolution

Vonage’s transformation from a traditional VoIP provider to a provider of communications APIs was a key factor in its appeal.

This evolution allowed Vonage to tap into the growing demand for programmable communication tools.

The company’s APIs enable developers to embed voice, video, and messaging functionalities into their applications.

Implications for the Market

The Ericsson-Vonage deal signals a continued trend of consolidation within the cloud communications industry.

It also highlights the increasing importance of APIs as a core component of modern communication infrastructure.

This acquisition is likely to spur further innovation and competition in the CPaaS market.

Okta's Acquisition of Auth0: A $6.5 Billion Investment

Okta established itself as a prominent provider of cloud-based identity management solutions for enterprises. However, the company aimed to expand its reach beyond traditional corporate applications.

To achieve this broader scope, Okta made a significant investment, acquiring Auth0 for $6.5 billion. Auth0 is a platform favored by developers for integrating identity management directly into their software applications.

Strategic Rationale Behind the Deal

This acquisition was strategically motivated by Okta’s desire to address the full spectrum of identity needs. The goal was to encompass both identity management for employees within organizations and identity solutions embedded within customer-facing applications.

Okta viewed this expansion as crucial, and demonstrated its commitment by allocating substantial financial resources to facilitate the integration of these two distinct, yet complementary, identity platforms.

The purchase aimed to position Okta as a comprehensive identity provider, serving a wider range of use cases and solidifying its market leadership.

American Tower’s Acquisition of CoreSite: A $10 Billion Deal

During mid-November, the data center industry witnessed two significant transactions. A major acquisition occurred when American Tower, a real estate investment trust (REIT), completed the purchase of CoreSite, the fourth-largest data center provider in the United States, for a substantial $10 billion.

Details of the Transaction

This investment secured American Tower ownership of 25 data centers. These facilities collectively produce an annual revenue of $655 million. The deal represents a considerable expansion of American Tower’s presence in the data center market.

The acquisition allows American Tower to diversify its portfolio beyond traditional cell towers. It positions the company to capitalize on the growing demand for data center infrastructure. This demand is driven by cloud computing and increasing data consumption.

CoreSite’s Position in the Market

CoreSite is a prominent player in the U.S. data center landscape. It provides colocation and interconnection services to a diverse range of customers. These include enterprises, cloud providers, and network operators.

The company’s data centers are strategically located in key metropolitan areas. This provides customers with reliable and low-latency connectivity. CoreSite’s robust infrastructure and customer base made it an attractive target for acquisition.

Implications for the Industry

This $10 billion deal highlights the continued consolidation within the data center industry. It demonstrates the significant value placed on data center assets. Further mergers and acquisitions are anticipated as demand for data center capacity continues to rise.

The transaction is expected to benefit both American Tower and CoreSite. American Tower gains a strong foothold in the data center market, while CoreSite benefits from the resources and scale of a larger organization.

Intuit's $12 Billion Acquisition of Mailchimp

A notable transaction occurred as Intuit, primarily recognized for its suite of financial tools, acquired the email marketing company Mailchimp for $12 billion. This move represents a significant expansion of Intuit’s services.

Expanding Services for Small Businesses

Intuit currently provides financial solutions to a large number of small businesses. The acquisition of Mailchimp allows Intuit to broaden its offerings beyond finance.

The strategy involves integrating email marketing capabilities into the existing platform. This will enable Intuit to provide a more comprehensive suite of tools for small business owners.

Potential for Further Growth

Over time, Intuit may extend its services even further. The Mailchimp acquisition could serve as a foundation for offering additional business solutions.

This expansion aims to solidify Intuit’s position as a key partner for small businesses. Providing a wider range of services increases its value proposition to this crucial market segment.

The deal was unexpected by some industry observers. However, it signals Intuit’s ambition to become a more holistic provider of business management tools.

Mailchimp’s established presence in email marketing is a valuable asset. It complements Intuit’s existing financial software and services.

Thoma Bravo's Acquisition of Proofpoint for $12.3 Billion

A significant transaction in the cybersecurity sector saw private equity firm Thoma Bravo acquire Proofpoint for $12.3 billion in cash. This deal mirrors the earlier Mimecast acquisition, ranking as another substantial investment in email security.

Details of the Acquisition

Proofpoint, specializing in email protection services, became a focal point for private equity interest throughout the year. The $12.3 billion valuation underscores the growing importance of robust email security solutions.

Similar to the Mimecast deal, this acquisition highlights a trend of private equity firms targeting companies within the email security landscape. Thoma Bravo’s investment demonstrates confidence in Proofpoint’s market position and future growth potential.

The substantial financial commitment reflects the increasing demand for advanced threat protection against email-borne attacks. Protecting against these threats is becoming increasingly critical for organizations of all sizes.

Implications for the Cybersecurity Industry

• Increased private equity investment in cybersecurity.
• Continued consolidation within the email security market.
• Focus on innovation and development of advanced threat detection capabilities.

This acquisition is expected to spur further innovation and competition within the cybersecurity industry. Companies will likely focus on enhancing their offerings to address evolving threat landscapes.

The deal also signals a broader trend of private equity firms recognizing the strategic importance of cybersecurity. Investing in this sector is seen as a promising avenue for long-term growth and returns.

KKR and Global Infrastructure Partners Acquire CyrusOne for $15 Billion

A significant transaction in the data center sector involved KKR and Global Infrastructure Partners in the acquisition of CyrusOne, the third-largest data center provider in the United States. The deal was valued at $15 billion, representing a substantial investment.

According to Synergy Research, this acquisition constitutes the largest private data center deal ever recorded in the U.S. market. It demonstrates continued profitability potential within the cloud infrastructure landscape.

Significance of the Deal

The transaction highlights that opportunities for financial gain extend beyond the dominant players – Amazon, Microsoft, and Google – in the cloud infrastructure market. Investment continues to flow into supporting infrastructure.

This acquisition underscores the ongoing demand for data center capacity and the attractiveness of the sector to investors. CyrusOne’s position as a key provider made it a valuable target.

The scale of the $15 billion deal indicates a strong belief in the future growth of the data center industry. It suggests a robust market even outside the hyperscale cloud providers.

Microsoft's Acquisition of Nuance Communications: A $19.7 Billion Deal

In April, Microsoft announced its plans to acquire Nuance Communications for $19.7 billion, signaling a significant move into the healthcare sector. This acquisition aims to bolster Microsoft’s position within the rapidly growing healthcare technology market.

Regulatory Scrutiny and EU Approval

The proposed deal has encountered some challenges, notably from regulators in the United Kingdom who are currently reviewing the acquisition. However, a positive development occurred this week with the approval of the deal by European Union regulators.

This EU approval is viewed as a promising sign for the completion of the acquisition, despite the ongoing review in the U.K. The transaction is expected to enhance Microsoft’s capabilities in speech recognition and artificial intelligence, particularly within healthcare applications.

Nuance Communications is a leading provider of conversational AI and cloud-based solutions, especially within the healthcare industry. Integrating Nuance’s technology will allow Microsoft to offer more comprehensive and innovative solutions to healthcare providers and patients.

Impact on the Healthcare Market

The acquisition is anticipated to drive further innovation in areas such as clinical documentation, virtual assistants, and remote patient monitoring. Microsoft intends to leverage Nuance’s expertise to accelerate the development of AI-powered healthcare tools.

This strategic move underscores Microsoft’s commitment to transforming healthcare through technology. The company believes that combining its cloud and AI capabilities with Nuance’s domain expertise will result in substantial benefits for the healthcare ecosystem.

Oracle's $28.3 Billion Acquisition of Cerner

The most significant transaction of the year involved Oracle's purchase of the Electronic Health Records (EHR) company, Cerner, for $28.3 billion. This substantial investment demonstrates the considerable interest major software corporations are showing in the healthcare sector.

Oracle’s willingness to expend significant capital on a healthcare-focused firm signals a strategic shift. The acquisition is anticipated to undergo similar regulatory reviews to those experienced with the Microsoft deal, but currently represents the largest acquisition completed in 2021.

Deal Highlights and Implications

This move positions Oracle as a key player in the healthcare IT landscape. The company aims to leverage Cerner’s established presence and data resources to enhance its cloud-based healthcare solutions.

Cerner provides a wide range of health information technology solutions to hospitals and healthcare organizations. The integration of these technologies with Oracle’s existing cloud infrastructure is expected to drive innovation.

Potential Regulatory Challenges

Like other large tech acquisitions, the Oracle-Cerner deal is subject to scrutiny from regulatory bodies. Concerns may arise regarding data privacy, market competition, and the potential for monopolistic practices.

The review process will likely focus on ensuring the acquisition does not hinder innovation or negatively impact patient care. Successful navigation of these hurdles is crucial for the deal's finalization.

Industry Impact

The acquisition is expected to accelerate the adoption of cloud-based solutions within the healthcare industry. It may also spur further consolidation as other tech companies seek to expand their healthcare portfolios.

Here's a summary of potential impacts:

• Increased investment in healthcare IT.
• Faster innovation in EHR systems.
• Greater emphasis on data analytics and interoperability.

Ultimately, the Oracle-Cerner deal represents a significant development with far-reaching implications for the future of healthcare technology.