4 ms·
Markets are strong, but big startup M&A deals just aren’t happening
- startupdiscuss 9y agoConfused: strong public markets are an argument for IPOS. They are not an argument for M&A. If the acquiring company pays in stock, it may even be an argument against M&A (unless you think it is just "temporarily inflated").
- davidreiss 9y agoAgreed. Strong markets are when startups IPO and established companies merge. We have seen some big startup IPOs ( like SNAP ) and some decent mergers especially in the pharma sector ( for tax benefits ).
- adventured 9y agoThe very high multiples are one obvious issue as noted in the article. The other, is that there are simply a lot less public companies available today to do acquisitions. There are 40% fewer public companies versus 1997, in an economy well over twice as big in nominal dollar terms. Companies like Tumblr and Polyvore were eaten by Yahoo for large sums. There is no Yahoo to throw around its market cap for acquisitions now. There's also no AOL, and so on. There has been substantial consolidation, with fewer replacement buyers coming into the market via IPO. Is Verizon going to spot the next Flickr? I wouldn't bet on it. Further, Chinese tech companies, many of which have plenty of money to spend, are finding it almost impossible to make large foreign acquisitions now, due to Xi's very tight policies on capital controls. That has gotten a lot worse in the last year.
- holydude 9y agoYea it is a bullshit situation. Western companies cant acquire chinese ones and chinese ones cant or wont acquire the western ones.
- jfim 9y agoCan you elaborate on why that is a bullshit situation?
- Analemma_ 9y agoIf you believe in laissez-faire or neoliberal capitalism, the actions of the Chinese government are obstructing "the natural order of things" and are hence bullshit.
- yuhong 9y agoIn this case, I think it is to protect the foreign reserves that China have. If Chinese companies did large acquisitions of US companies, it might reduce the value of the yuan.