Valleywag
Bear Stearns' epic fail will make M&A financing hard to come by. IPOs seem to have gone the way of Kozmo.com. That leaves exactly zero practical exit strategies for VCs. I came away with that insight after swimming through the flood of water metaphors in Tom Abate's economic pulse-taker in the Chronicle.
A lack of M&A activity could have long-term repercussions for the venture industry. To attract investors to new funds, VCs need to have a track record of successfully flipped startups, and those deals require buyers and financing. Which might explain why everyone's being so nice to Frank "not a symbol of corruption" Quattrone, whose Qatalyst M&A advice shop is one of many springing up to take Wall Street's place. (Photo by Sproston Green)
Comments
The story was a bit waterlogged by lack of explanation concerning why M&A would suffer. If the buyer has a lot of cash -- and the big tech companies all do -- then bridge financing in an M&A is not a big risk for any investment bank with cash. And most of them still have cash. This is a relatively painless way to earn fees.
It's a buyers' market, so prices for M&A deals will be down, but that's not a liquidity issue.
I might be missing something here. How exactly does the current debt liquidity problems hurt tech M&A in any signficant way? I'm honestly curious.
I thought M&A was the new IPO
Angel investment is the new Venture Capital
Meh, who cares what the Chron writes about business? The only person worth reading there is Steve "When Animals Attack" Rubenstein.
Hmmm, I see the quality of Valleywag's community is slipping indeed.
@old-and-in-the-way: @matto: because of the number of deals initiated by private equity firms...while tech companies may remain cash-rich and unaffected for now, poor liquidity DOES affect the PE guys' ability to finance deals, and will diminish somewhat. Or as the theory goes...
;-)
Comment on this post
Reply by EmailLogin with your username and password below. Or comment on this post via email.
Forgot your username or password? New User?