In the middle of the Great Depression, Forrest Mars (of Milky Way Bar fame) made the unorthodox decision to buy a dog food company. With next to no competition, Mars dominated the European market. Today, the company continues to earn the majority of its revenue serving animals. The current recession presents similar M&A opportunities for tech's titans.
Circumstances favorable for buyers:
- Corporate balance sheets fatter than they've been in decades
- Interests rates are low; easier to borrow money and make deals happen
- Studies show acquisitions made during/immediately after a recession produced nearly 3x in excess returns compared to those made in boom times
Microsoft, Oracle and Amazon → all made more acquisitions during than before/after Great Depression
Moves that could make sense:
- Healthcare: Companies like EverlyWell, LetsGetChecked could help company's mission to become "new Red Cross".
- Staffing: Logical next step after building out COVID-free supply chain is to offer virus-free in-home services.
- Education: Students looking for lower-cost digital education options. AWS & Udacity partnership already in place.
- Digital health: Workout-app ambitions could be bolstered by adding catalog of classes (Aaptiv, Sculpt Society), mental health features (Calm).
- Entertainment: Apple TV+ lagging behind in streaming market. Netflix the most logical acquisition with the least baggage.
- Connected hardware: Companies like Peloton, Sonos could help expand services revenue, connection to health.
- Creator tools: Patreon purchase would give influencers more ways to monetize without leaving Facebook services.
- Games: Social gaming, not VR, is the new frontier. Fortnite (Epic) and Roblox both fundamentally social games, logical choices.