With venture capital totals depressed around the world and the IPO market just starting to poke its head out from hiding, who is buying startups these days? The answer is fewer people than before. But while aggregate M&A deal volume in startup land is a bit of a bummer according to a new report from CB Insights, there are a number of positive data points that should lower cortisol levels among startup founders struggling to close a new tranche of private capital.
Today we’re looking at where deals are getting done from a geographic perspective, contrasting the European market with what we saw in the United States in the second quarter. We’ll also explore how median sale prices are changing, and what sort of return those exits might generate for private-market investors.
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That data is largely bereft of Big Tech activity. Apple was the only company among tech’s most valuable to actually buy a smaller company in Q2 2023: the Mira deal, you may recall. That means when we are looking at second-quarter tech M&A activity, we’re discussing a sample set that is nearly free of the influence of tech’s biggest, and wealthiest, players.
From a trailing perspective, that’s not encouraging. From a forward perspective, given that certain M&A data points improved in the second quarter without the help of the deepest pockets in the industry, we could allow ourselves a bit of bullishness when it comes to M&A totals that we could see next year.
Europe vs. the United States
Europe saw more tech acquisitions than the U.S. in the second quarter of the year: 812 compared to 632 in the U.S. This is noteworthy because by now we know it’s not just a blip in the data; it’s been the case for six quarters in a row.
Deal volume is one thing, but leading in the number of deals done doesn’t mean that Europe is home to the largest M&A transactions. The U.S. is the country that sees the most deals worth more than $100 million. That’s 28, or 41%, of all such deals in Q2.