In April 2021, Microsoft announced it would acquire Nuance Communications – a leader in speech recognition and conversational AI – for approximately $19.7 billion​. This deal combined Microsoft’s cloud and AI capabilities with Nuance’s decades of expertise in voice recognition (notably in healthcare), marking one of the largest tech acquisitions of that year. Below we detail the companies involved, the structure of the deal, and its business impact, as covered in a case study video and supporting reports.

Companies Involved
Microsoft: A global tech giant (NASDAQ: MSFT) with a focus on cloud services, enterprise software, and AI. Microsoft had been developing industry-specific cloud offerings (e.g. Microsoft Cloud for Healthcare) and saw strategic value in expanding its AI solutions in health and other industries​.

Nuance Communications: A Massachusetts-based pioneer in conversational AI and speech recognition, known for products like Dragon NaturallySpeaking and Dragon Medical. Nuance’s technology was widely used in healthcare for clinical speech-to-text and had broad applications in customer service (IVR systems, virtual assistants, etc.)​. By 2020, Nuance’s healthcare AI solutions were used by over 75% of radiologists and 55% of physicians in the U.S, making it a powerhouse in medical speech recognition.

Deal Structure and Details
Announcement Date: April 12, 2021 – Microsoft and Nuance entered a definitive agreement for the acquisition​.
Purchase Price: $56.00 per share, an all-cash transaction totaling $19.7 billion (a ~23% premium over Nuance’s prior closing price)​. This valued Nuance among Microsoft’s biggest acquisitions (second only to LinkedIn at that time)​.
Leadership & Autonomy: Nuance’s CEO, Mark Benjamin, would remain as CEO of Nuance post-acquisition, reporting to Microsoft’s Cloud + AI executive (Scott Guthrie). This mirrored Microsoft’s approach with LinkedIn, allowing Nuance to operate somewhat independently while leveraging Microsoft’s resources​.
Closing: The deal closed in March 2022 after clearing regulatory reviews in the U.S. and EU. (It faced scrutiny due to its size, but regulators found it did not substantially lessen competition​.)

Business Rationale and Impact
Strategic Rationale: Microsoft’s motivation for acquiring Nuance was to instantly bolster its AI capabilities in a critical domain. The purchase gave Microsoft access to advanced speech recognition and natural language AI technology, expanding its presence in the healthcare sector​. Nuance’s deep healthcare integrations (e.g. with electronic health records systems) and domain expertise would help Microsoft “bridge the gap” between frontline clinical work and its cloud services​. In short, Microsoft saw an opportunity to leverage Nuance’s IP and customer relationships to become a major player in healthcare technology​.
Healthcare Impact: The acquisition is set to accelerate the use of AI in clinical workflows. For example, Nuance’s ambient clinical intelligence can automatically transcribe doctor-patient conversations and update medical records. Integrating this with Microsoft’s Cloud for Healthcare and Azure services enables real-time clinical decision support and more efficient care delivery​. Microsoft’s cloud + Nuance’s AI is expected to produce more sophisticated, interoperable healthcare solutions, improving provider productivity and patient outcomes. Microsoft and Nuance executives noted the combined company aims to “make healthcare more personal, affordable and effective” through AI-driven tools​.
Broader Business Impact: Beyond healthcare, Microsoft can apply Nuance’s AI tech to other industries. Nuance’s speech recognition and customer engagement solutions (from call center AI to biometrics) together with Microsoft’s Azure, Teams, and Dynamics 365 create opportunities for new AI-powered offerings in retail, finance, telecom, and beyond​. The deal also doubles Microsoft’s addressable market in the healthcare provider space to nearly $500 billion, while strengthening its competitive position against other tech giants in enterprise AI. Overall, this acquisition exemplifies how big tech companies are investing in AI through M&A to gain specialized talent and products, and to drive innovation in high-growth areas.