Venture capital totals have been depressed worldwide, and the IPO market is just beginning to show signs of recovery. In this challenging landscape, who is still buying startups? The answer is fewer people than before. However, a new report from CB Insights highlights some positive data points that should provide some relief to startup founders in their quest to secure private capital.
Key Takeaway
Despite the overall decline in M&A deal volume in the startup sector, there are positive indicators that suggest a potential rebound in the near future.
Geographic Perspective: Europe vs. the United States
Examining the second quarter data, we can see a contrast between the European and US markets in terms of M&A activity. Surprisingly, Europe outpaced the US in terms of tech acquisitions, with 812 deals compared to 632 in the US. This trend has continued for six consecutive quarters, making it more than just a temporary blip in the data.
It’s important to note that while Europe might have more deal volume, the largest M&A transactions, those worth over $100 million, still predominantly occur in the US. In fact, the US accounted for 28 out of 41% of such deals in Q2.
The Absence of Big Tech Players
When we examine the second-quarter tech M&A landscape, it’s striking to observe the dearth of Big Tech involvement. Among the most valuable tech companies, only Apple made a notable acquisition – the Mira deal. This means that the sample set for our analysis is nearly untouched by the influence of the industry’s largest and wealthiest players.
While this might seem discouraging, there is optimism to be found for future M&A activity. The fact that certain M&A data points improved in Q2 without the involvement of the deep-pocketed tech giants suggests that there is potential for a resurgence in M&A activity overall.
As we navigate through these challenging times, startup founders and investors can find solace in the positive signs emerging from the technology M&A market. While deal volumes may be lower and the absence of Big Tech players may be concerning, the European market’s consistent performance and the potential for future growth both provide hope for a revitalized ecosystem.
