What to do when you are most likely to exit M&A? avenue

Despite the plentiful headlines about mega billion-dollar M&A transactions, record IPOs and the rapid growth of SPACs, small deals will continue to be the most likely exit for the vast majority of tech startups. Over 30 years of experience in M&A, including at White & Case and Barclays, have shown me too many startups not ready for a sale or merger. The following article provides specific advice on how to prepare your startup in order for M&A.

It is important to aim for a multi-billion-dollar sale, a SPAC or IPO deal. However, it can be practical to make your startup more affordable.

The second quarter saw record global M&A deals with an estimated $1.5 trillion in total value. However, smaller transactions far outnumber the mega-billion dollar deals. In the United States, there were 16,672 transactions in the 12 months ended June 31. However, only 583 of those deals, which is 3%, had a value greater than one billion dollars (FactSet). Although the IPO market has recovered to its former health, M&A continues to be 88% of exits. According CB Insights Q2-2021 State of Venture Report, this year saw 503 IPOs, and 5,203 transactions. The rate at which new SPAC issuances dropped by 90% after the SEC declared in April it would be reviewing new guidelines for SPACIPOs.

It is important to aim for a multi-billion-dollar sale, a SPAC or IPO deal. However, it can be practical to make your startup more affordable.

These are some tips to help you prepare for an M&A exit.

Monitor M&A within your sector

Create an alert in Google News to be notified of M&A activity within your sector. If your startup falls under the IoT sector, you can search Google News for “IoT acquisitions” to find news articles about IoT-related acquisitions. You can save the search to be able to go back to Google News regularly. You can also track the closest competitors using Google News to find out who’s selling.

Make a list with potential acquirers

Make a list or list of companies that are most likely to purchase your startup. The list must include both domestic and foreign companies as well as businesses from non-tech sectors, private equity and portfolio firms, and VC-backed startups. You can also track these potential acquirers via Google News.

You might consider pursuing a parallel career.

When you raise capital, consider approaching 10 of the most likely buyers. Your board will have options when your startup receives both M&A terms sheets and VC term papers. VCs will be impressed by the M&A activity of your startup and 10 likely acquirers. This will increase their chances of funding you.

Publiated Mon, 26 July 2021 at 19:20:04 +0000

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