Tomasz Tunguz - Why Startup M&A in 2024 Will Rebound
Tomasz TunguzVenture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Why Startup M&A in 2024 Will Rebound
Earlier this week, Alteryx announced its intention to go private for $4.4b. It’s the 10th in 2023.
In December of last year, I wrote :
With 10 companies taken private, the market exceeded my prediction. Meanwhile, venture-backed software M&A in the US, Canada, & Europe during 2023 totaled about $10b, about 20% of take-privates. The top two companies account for about one-third of that amount: WideOrbit (ad management for TV & radio) at $1.6b & Mosaic (machine learning platform) at $1.3b. Strategic M&A was limited in 2023 for a few reasons. First, anti-trust scrutiny, which blocked the Adobe/Figma transaction, has pressured five trillion-dollar-market-cap-acquirers. Second, the significant stock market volatility makes valuing acquisitions difficult. Third, the lack of sales predictability in the first two quarters of the year, because of pipeline shocks, focused teams on internal stability, rather than outward expansion. The anti-trust pressure will remain in 2023, but the other two factors should dissipate, suggesting strategic M&A should grow meaningfully in 2024. In addition, the decreasing costs of debt as the Fed cuts rates will continue to fuel private equity M&A. |
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