PitchBook News - M&A finds few lifelines in Q3

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The Daily Pitch: VC

October 25, 2022

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In today's Daily Pitch, you'll find:

A storm of headwinds conspired against M&A deals, according to our latest Global M&A Report.

Consolidation among startups is pushing Europe toward another record year for VC-backed acquisitions.

Interplay's Mark Peter Davis joins the latest episode of the "In Visible Capital" podcast.

Today's Top Stories

Slowing global M&A activity found few lifelines in Q3

Companies and investors certainly shopped till they dropped, and they might not be getting up anytime soon. Global M&A activity that had ratcheted up to record-high deal counts and values at the end of 2021 and then dropped in the new year, fell further in Q3, clocking in 29.8% down from the Q4 2021 peak.

Climbing inflation, rising interest rates, tumbling tech and healthcare stocks, and a weaker euro all worked to drag down M&A deals, according to our Q3 2022 Global M&A Report, sponsored by Liberty GTS and RBC Capital Markets.

Public companies' trading multiples have plummeted from a median multiple of 3.3x revenue in 2021 to 2.3x at the end of Q3, while M&A deal multiples have held firm at 2x during the same span.

Private equity and corporate buyers alike snapped up business products and services companies at higher rates, as 17 deals of $1 billion or more closed in the sector in Q3.

The COVID-19 pandemic's lingering effects on the labor force dragged on the healthcare industry's pace of M&A, which typically fares well in recessionary times.

read the report

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On the podcast: VC's New York story

Interplay managing partner Mark Peter Davis joins the podcast to discuss the advantages and disadvantages of being a VC in New York, the ins and outs of entrepreneurship, and how Interplay approaches investments in the blockchain space—while avoiding the crypto hype.

Plus, PitchBook senior news editor James Thorne shares insights from his reporting on the exodus of executive leadership at SoftBank.

listen to the episode

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A message from Deloitte

At $12.9 billion, life sciences dealmaking remains resilient

The life sciences sector is dynamic as ever. At $12.9 billion across 461 deals through summer 2022, investment is still strong across the life sciences expansion-stage ecosystem. Deloitte's latest Road to Next installment explores the key factors shaping the entire sector, featuring:

How market turmoil is shifting focuses for executives at life sciences companies
Key regulatory developments to watch
Data on cumulative unicorn valuations, financing metrics and more

Read it now

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European VC-backed acquisitions on pace for new high

(popicon/Shutterstock)

VC-backed acquisitions are set to achieve a new record in Europe as consolidation among startups grows.

As Europe's startup ecosystem has matured, it has seen an increase in M&A activity that will likely continue as the downturn makes exits more difficult.

Recommended Reads

Biotech founders are feeling squeezed in the UK, where the demand for lab space is vastly outweighing the supply. [Sifted]

Private equity scrambles to comply with an SEC marketing rule set to take effect in early November. [The Wall Street Journal]

Scientists may have discovered a method for making magnets used in wind turbines and electric cars without the rare-earth metals that are almost exclusively produced in China. [Bloomberg]

Since yesterday, the PitchBook Platform added:

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VC valuations

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People

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Funds

See what our data software can do

Quick Takes

	The Daily Benchmark
	2019 Vintage Global Secondaries Funds
	VC Deals
	Accel leads $55M round for Merge
	Fermyon raises $20M Series A
	Wispr brings in $10M
	Spacecraft company Apex nabs $7.5M
	Fundraising
	Flourish Ventures launches Africa-focused investment program
	Investors
	Runway Growth Capital lends $45M to Nalu Medical
	Syncona to acquire AGTC

The Daily Benchmark

2019 Vintage Global Secondaries Funds

Median IRR

55.63%

Top Quartile IRR

66.29%

1.69x

Median TVPI

Select top performers

Dover Street X

ICG Strategic Equity Fund III

Landmark Infrastructure Partners II

*IRR: net of fees

16 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Accel leads $55M round for Merge

Merge, a developer of customer integration tools for B2B companies, has raised a $55 million Series B led by Accel. Founded in 2020, the company is backed by investors including NEA and Addition.

View round

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Fermyon raises $20M Series A

Fermyon has raised $20 million in a round led by Insight Partners. The company is a creator of cloud tools designed to help developers build and manage microservices applications.

View round

View similar company »

Wispr brings in $10M

Wispr has raised $10 million in equity and debt from investors including Triple Point Capital and MVP Ventures. Founded in 2021, the company is a developer of neurotechnology designed to help non-invasive neural interfaces interact with users.

View round

View similar company »

Spacecraft company Apex nabs $7.5M

Apex, a Los Angeles-based company which manufactures spacecrafts for commercial and government customers, has emerged from stealth with $7.5 million in funding led by Andreessen Horowitz.

View details

View 1,322 investments »

PitchBook webinar: US leveraged loan market outlook

With rising rates, distress and volatility, the leveraged loan market is currently facing significant instability and wariness from investors. Join our experts from LCD as they explore market trends, collateralized loan obligations and the potential role of PE in this environment. Additionally, a Q&A segment will be open for questions about the future of leveraged loans.

Register now to secure your spot.

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Fundraising

Flourish Ventures launches Africa-focused investment program

Flourish Ventures has launched Madica, a structured investment program for pre-seed stage technology companies in Africa. The program seeks to back 25 to 30 African entrepreneurs with up to $200,000 each.

View details

View 96 investments »

Investors

Runway Growth Capital lends $45M to Nalu Medical

Runway Growth Capital has committed a $45 million senior secured term loan to Nalu Medical, a VC-backed medtech company specializing in the treatment of chronic neuropathic pain.

View details

View 17 investments »

Syncona to acquire AGTC

Syncona, an investor focused on healthcare, has agreed to buy Applied Genetic Technologies Corp. for roughly $23.5 million, or about 34 cents per share. "Given the state of equity and other funding markets, we see significant challenges in funding ongoing operations beyond 2022," AGTC chairman Scott Koenig said in a statement describing the deal.

View details

View 40 investments »

Chart of the Day

Source: PitchBook's 2022 UK & Ireland Private Capital Breakdown

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PitchBook News - M&A finds few lifelines in Q3

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