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Microsoft: One of the Most Active in Tech Startup Acquisitions

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Mar. 15 2016, Updated 7:05 a.m. ET

Tech sector expects to see maximum M&As in 2016

Microsoft (MSFT) has emerged as the top tech player for M&As (mergers and acquisitions) in 2015. But other technology players such as IBM (IBM) and Oracle (ORCL) are also rapidly pursuing strategic buyouts. This year is expected to be one of the busiest years for the tech sector. A KPMG survey showed that technology is expected to be the most active sector for consolidation or M&As in 2016.

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Microsoft, Google, and Amazon topped the startup acquisitions list in 2015

SMAC (social, mobile, analytics, and cloud) is a disruptive technology that’s transforming the current IT (information technology) environment at a rapid pace. At first, Microsoft was slow to understand the importance of the cloud. But in 2015, cloud technology dominated Microsoft’s reports, filings, and presentations. Looking at the company’s recent growth in the cloud space, Microsoft seems to be doing fine.

Microsoft, Google (GOOG) (GOOGL), and Amazon (AMZN) have also emerged as the top three most active tech buyers of early stage companies. Early stage companies are the companies that have managed to raise Series Seed or Series A funding.

Technology companies such as Microsoft, IBM, and Google, are seeking innovation through acquisitions of startups. The acquisitions typically make their existing offerings incrementally better, create new elements, or create and offer products or services that are yet to be introduced into the market. Leading technology players invest in startups to seek innovations and access to disruptive technologies.

Investors who want to gain exposure to Microsoft could consider investing in the Technology Select Sector SPDR ETF (XLK). XLK invests ~10% of its holdings in Microsoft and has a 31% exposure to application software.

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