Yes, 2016 is the year to sell your startup…
There’s a saying, “Good companies are bought, not sold.” This is true — for about 1% of companies. For everyone else, the company is sold. Talk to any founder or investor who’s successfully done an acquisition and listen to how much work they put into making it happen.
Over the past three months we’ve seen a marked increase in inbound demand for people exploring exit opportunities. Just this past week I’ve talked to eleven separate founders, one of the most prolific angel investors in the US, and the head of corporate development from one of the world’s largest venture portfolios who are all actively looking to find exit and liquidity options for their companies.
2016 is setting up to be the most active year for technology M&A in the history of the industry due to some key contributing factors:
- Large amount of supply – thousands of companies are coming to the end of their vintage fundraises from 2013 and 2014, which were the most active years of VC investing since 2001.
- Concern about easy access to private capital – venture investors have slowed down.
- Devaluation of private markets, as demonstrated by large institutional investor write downs.
- Concern about world markets and general macroeconomic stability.
- A weak IPO market for technology company liquidity.
- Huge amount of demand: every company is now a software company, whether they sell sugar water or build buildings.
Last week at the #PostSeedConf, Kleiner Perkins’ John Doerr remarked that 2016 is looking to be a big year for M&A. Many companies are beginning to mimic Google’s archetypal M&A strategy as a means of growth — Doerr claimed the search giant has done nearly one acquisition per week since 2010. (But note, only 5 of them have been over $1B.) His comments we’re recently echoed by Redpoint’s Tomasz Tunguz who blogged last week about the tremendous cash – $380B – in the coffers of the 60 largest publicly traded software companies — all of which will contribute to a very acquisitive 2016.
Here at Exitround, we have the largest data sets of real-time Buyer “intent data” for technology M&A. As the most active hub of technology M&A — where thousands of Buyers and Sellers are connecting on a monthly basis — the proprietary data gleaned from the network provides leading indicators of “buyer intent” well before buyers actually acquire those companies.
What’s Hot in M&A for 2016
- Dramatic increase in M&A interest for companies focused on Content, Content Management and Content Production.
- On the technology side, Machine Learning is showing increasing demand. Companies focusing on Analytics are also seeing strong interest.
- Consistent M&A interest in companies focused on Mobile Monetization and Mobile Advertising.
- Over time, the most dramatic decrease of M&A interest in companies is focused on media and design.
In one recent case, two Thursdays ago a well known startup with tier 1 VCs joined the Exitround network. In the past 10 days, this startup has connected with more than 10 potential acquirers and they are expecting a Term Sheet today.
Over the past 12 months the Exitround network has helped facilitate more than two dozen M&A transactions with deal sizes ranging from $250,000 to $80,000,000. The bulk of these transactions are in the $5M to $25M range.These deals have been privately matched with over 3,120 unique and relevant companies, including public serial acquirers such as Google, Facebook, Twitter, Yahoo, Box; quickly growing unicorns such as Airbnb, Pinterest, Dropbox, GitHub, Palantir; and large traditionally non-tech companies actively looking to get into the game such as Red Bull, Westfield, Capital One, Fender, Target, Home Depot, and many many more.
2016 is the year of industry wide M&A activity. Don’t miss the boat.
Join us on Thursday, January 21, 2016 for a one hour webinar covering the quick and dirty facts on learning a framework for how to think through M&A: expectations, process and structure of today’s dynamics in M&A.
This will be the beginning of a content series preparing founders and investors for what they need to know in today’s rapidly changing M&A environment. #ExitTalk