September 2023 Newsletter

Friends,

Sharing business and legal developments as we see them today.

M&A was a revolving topic in August. This includes a recently published report showing the importance of due diligence in any M&A transactions?and Pitchbook releasing its?Q2 2023 M&A Report?with very interesting findings.

Pitchbooks report findings show deal volume and deal value are diverging. The report shows price multiples in correction mode, with an approximate 20% drop since peak levels in 2021. This is coupled with the fact that acquirers are focusing on smaller-scale deals right now as interest rates remain high, and they are sitting on very large amounts of dry powder. Pitchbook notes that this has led to a 33.7% drop in deal value, but the deal count remains steady. However, there could be some light at the end of the tunnel. Reuters reports are showing signs of a revival in investment banking as Morgan Stanley recently predicted an uptick in the sport of M&A. Goldman Sachs has also reported an increase in investment banking backlog, something that can "open the liquidity floodgates." Considering these reports, we may see that spike in M&A we have been waiting for next year.

It seems that the right conditions are falling into place as the economy stabilizes and interest rate hikes slow down, and only time will tell if 2024 will be the return we have been waiting for. We will continue to watch closely for more signs of an M&A boom as we move forward into the year.

Doing the necessary due diligence is a key factor in the success of any acquisition, before and after the closing, and for many years to come.

It allows the acquiring company to identify deal breakers, assess risks, make informed decisions, negotiate effectively, ensure compliance, plan for integration, and set the stage for a successful and value-enhancing merger or acquisition. Louis Lehot and Eric Chow published a roadmap to due diligence here.

This past month, Louis Lehot laid out a guide to?Cracking the Code: What Venture Capital Investors Look for in Early-Stage Start-Ups, Louis Lehot?and Eric Chow shared their guidance on?Positioning for the Exit at the Entrance, and Alidad Vakili, Sonia Kothari, and Rishi Sodhi provided knowledge on?Opportunity Zones: Should Your Start-Up Make One Its Home?

As always, we would love to see you at our upcoming events. Mark your calendars for October 17-18 at Ted AI at the Herbst Theater and Shack 15 in San Francisco. We are sponsoring this landmark event October 8-11 at HLTH in Las Vegas showcasing?the power and impact of AI. It has already booked entrepreneurs, chief scientists, the Co-Founder of Open AI Ilya Sutskever, President and Co-Founder of Anthropic Daniela Amodei,?Founder and Chief Executive Officer of ARK Invest Catherine Wood, and most recent addition, Reid Hoffman. Do not hesitate to reach out if we can help you brainstorm a legal or business challenge you are facing or if we can connect you to a potential investor, professional, or entrepreneur.

Your Foley & Lardner Silicon Valley team,

Natasha Allen,?Eric Chow,?Brandee Diamond,?Louis Lehot,?Lyman Thai,?André Thiollier,?Alicia D'Alba Dorner, and?Alidad Vakili