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A Quick Look at Tech M&A
There are two primary exit options for startups: IPO or M&A. We have written a considerable amount on the strong IPO market YTD, but where do we stand on M&A activity? Looking at 10 of the largest tech acquirers historically*, the year is off to a slow start. These companies closed only ~$2B of acquisitions in the first quarter of 2018, putting them on pace for the slowest year since 2013.
*Includes: Alphabet, Amazon, Apple, Cisco, Facebook, IBM, Intel, Microsoft, Oracle and Qualcomm.
Source: Company filings and EquityZen
Further, judging from comments from recent earnings conference calls, these behemoths don’t appear to be gearing up for an uptick in M&A any time soon.
What might be stalling these giants? Regulatory concerns and considerations could be a factor. Tech firms have (perhaps justifiably) faced greater regulatory scrutiny as of late and opening themselves to potentially even more scrutiny through increased deal-making may not be palatable right now. Valuations are likely another key factor. Emerging companies have enjoyed favorable pricing in private markets and - increasingly - in public markets (see SaaS multiples chart below). Strong valuations -- while good for IPO activity -- may be keeping potential suitors on the sidelines for now.
Historical SaaS Multiples
Source: Ycharts and EquityZen
In Other News…
Finance & Research Lead, EquityZen
Fuze - [Fuze Raises $150M in Funding]
Akili Interactive Labs - [Akili Closes $55M Series C Financing]
Auth0 - [Auth0 snags $55M Series D, seeks international expansion]
Good Eggs - [Good Eggs raises $50M and eyes West Coast expansion]
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