Revenue Roundup

?? Status in the M&A Involving U.S.-Based, VC-Backed Startups #merges #acquisitions

The M&A activity in 2024 has exhibited notable fluctuations in the number and value of transactions. After a robust start in January with 168 transactions, activity dipped in February but picked up again in March, maintaining a steady pace through the following months. The most significant spikes occurred in May and July, with July standing out by recording the highest transaction count of 170 and the highest value at $16.6 billion. This indicates intense market activity driven by substantial deals, reflecting growing confidence and investment in M&A throughout the year. We have a strong start in August with 35 acquisitions with a $2.6bn value. The biggest acquirers are?EQT Group , which has acquired so far 5 entities, followed by Cloudflare , Infinite Reality , and 英伟达 , acquiring 4 companies each. The majority of 594 acquisitions (53%) are made with companies HQ in the US, followed by the UK 113 (10%) and France 51 (5%).

Note: The total transaction value is likely higher, as this chart only accounts for disclosed amounts.

So this week, everyone is worried about the volatility index, which arguably went down from its high earlier this month to a lower level, although it remains high. The main concern is that the future Vix is elevated, suggesting that more economic volatility is expected. The impact on M&A is evident; higher volatility usually suppresses the acquisition appetite among investors and financial institutions. This statement is unclear or at least not unilaterally consistent wiht the other data. The reality is that the key players in the market remain active, which the chart above suggests is just growing. Another argument is investors' expectations behind key transactional participants in the M&A market.

So, is this the inhibitor for the M&A or not?

?? Industry in Focus: AdTech

#martech #adtech

The trends in funding for AdTech and advertising-related startups in the U.S. from 2015 to 2024 YTD are giving us a clear picture that AdTech is not getting much attention among many limited funding rounds. After peaking in 2015 with nearly $5 billion invested, the sector saw a gradual decline in total funding through 2019, with investments stabilizing around $2 billion annually.

However, 2021 marked a significant resurgence, with total funding exceeding $4 billion, the highest level since 2015. This surge likely reflects the increased demand for digital advertising solutions during the pandemic as companies sought to optimize their online presence.

The trend reversed in 2022 and 2023, with funding levels decreasing sharply as economic uncertainties and market corrections likely impacted investor sentiment. As of 2024 YTD, the total invested and the number of funding rounds have significantly dropped, indicating a challenging environment for AdTech startups.

This decline suggests a couple of things. This is predominantly business that is correlated with the budgetary control within the companies. The tougher the times, the less spending is dedicated to services these companies offer, limiting the cost to a must-have type or one that is very well justified. While the industry remains important, it may be undergoing a period of consolidation (or expect to go through) and very likely offers fewer deals at lower valuations. Needless to say, #ai has dragged many investors' attention.

Key players and recent investments in #adtech

1. The Brandtech Group | Series C | Description: The Brandtech Group, based in New York, New York, United States, helps brands improve their marketing strategies by leveraging technology to make them better, faster, and cheaper. Transaction value: $115M.
2. Knowde | Series C | Description: Knowde, located in San Jose, California, United States, is an online marketing platform dedicated to chemicals and ingredients. Transaction value: $60M.
3. Kennected AI | Venture - Series Unknown | Description: Kennected, headquartered in Indianapolis, Indiana, United States, provides SaaS-based marketing services that automate the prospect and outreach process. Transaction value: $25M.
4. Kevel | Series C | Description: Kevel, based in Durham, North Carolina, United States, develops ad-serving APIs to help developers build server-side ad platforms. Transaction value: $23M.
5. Vibe.co | Series A | Description: Vibe, located in Chicago, Illinois, United States, is a streaming TV advertising company designed for small and medium-sized businesses. Transaction value: $22.5M.

?? Stock Charts of the Week and why it matters 恩智浦半导体

The NXP stocks noticed a significant decline in the last earnings announcement due to the high dependency on the #automotive industry and anticipated slowdown wiht the automaker's sales (the company is roughly 60% dependent on the automotive). However, the future looks solid for the industry on that front. Yes, the electric and EV market is driving the entire industry to purchase more efficient chips, but that's not the only thing happening.

Something to watch?

?? Contrarian Point of View This Week

The chart highlights a trend: nearly all UK public companies taken private since 2016 have not returned to public ownership. This trend suggests a lack of sufficient IPO (Initial Public Offering) volume, particularly in the UK market. Many other markets observe this process with some level of acuteness.

When companies stay private after being taken off the public markets, it often indicates that the private equity (PE) firms believe they can generate more value by keeping the companies private rather than re-listing them through an IPO. This could be due to various factors such as:

1. Market Conditions: The public market environment may need to be more conducive to high valuations, making an IPO less attractive. We see this in the US market.
2. Strategic Repositioning: PE firms often restructure and optimize companies, potentially aiming for a strategic sale to another private or corporate entity rather than a public offering.
3. Value Creation: PE firms might feel they can extract more value by improving operations, governance, or market positioning before considering any public listing.

In terms of valuation, this trend could have mixed implications:

• Higher Valuations in Private Markets: If PE firms believe they can achieve higher returns privately, this could imply that the private market valuations are currently more favorable than what the public markets might offer.
• Potential Devaluation or Stagnation: If companies are kept private due to concerns over public market conditions or the inability to attract investor interest, it suggests potential overvaluation in the private market or challenges in achieving the same valuation publicly.

Overall, this situation highlights an ongoing problem with the valuation. Too high? Or too low; both sides don't see this as attractive enough to engage. The points of view must narrow, helping to create a catalyst for a better IPO market. Many founders or strategic investors think that the 2021 or 2022 valuations will be back (unlikely), or PE firms don't want to pay the assets the price that won't give them sufficient return over the typical restructuring cycle. The shift favoring private ownership over public listings can have broader implications for the overall market dynamics, market competitiveness, liquidity, and the role of IPOs in driving growth and investment opportunities.