Startup M&A Trends Higher As PE Leads, But Remains Sluggish Compared To Earlier Years

Startup traders had been seeking to M&A in 2024 as the fast track to getting liquidity. However whereas Crunchbase information exhibits deal quantity for venture-backed firms is probably going up 12 months over 12 months, it stays sluggish in comparison with earlier years.

That’s even if the general public markets have been traditionally gradual and personal firm valuations have come down, which ought to make acquisitions extra compelling for consumers.

Apparently, among the largest M&A offers this 12 months have been led by non-public fairness corporations — slightly than the general public firms that usually prime the acquisition leaderboards.

All in all, M&A for venture-backed firms to this point this 12 months has reached $67 billion throughout greater than 1,300 offers, Crunchbase information exhibits. (It’s value noting, nevertheless, that solely round 16% of offers analyzed since 2019 have a value related. Nearly all of deal costs usually are not disclosed.)

These figures usually are not removed from whole M&A exercise in 2023, when it was $72 billion throughout greater than 1,700 offers.

Nonetheless, 2024 trails decrease than exit values in prior years.

Whereas M&A and public-market exits stay gradual, secondary financings are growing in popularity, returning some capital to traders.

PE leads

Biotechnology was the sector that led for the most important variety of acquisitions over a billion {dollars} in 2024. For software program firms acquired for a billion {dollars} or extra, non-public fairness acquired the bulk this 12 months to this point.

In prior years, public firms usually topped the leaderboards for the most important offers.

Important offers this 12 months embrace New York-based Apollo’s deliberate acquisition of London-based bundle supply firm Evri for near $3.5 billion, and London-based Hg’s $3 billion acquisition of authorized and compliance tech startup AuditBoard, primarily based in Cerritos, California.

With all of the venture funding in biotech, it’s no shock that one of many largest offers was Merck’s acquisition of New York-based eye illness remedy firm Eyebiotech.

Lively acquirers

Probably the most lively acquirer in venture-backed startups in 2024 to this point has been Swedish non-public fairness agency EQT, with seven disclosed offers for venture-backed firms in the actual property, information, safety and logistics sectors, in response to Crunchbase information.

Additionally lively this 12 months had been public cloud companies firm Salesforce 1, semiconductor firm Nvidia, safety firm Cloudflare, and Autodesk, a 3D design software program developer for development. For these acquirers, sectors have included cloud administration, AI tooling, safety and asset administration and content material growth platforms.  Within the healthcare sector Stryker was actively buying medical gadget, well being monitoring and ligament development firms.

One non-public firm was additionally on the more-active acquirers listing: Connecticut-based digital surroundings firm Infinite Reality, which has acquired firms in gaming, Web3 and leisure.

Magnificent seven

Of the so-called magnificent seven of largest tech firms, Microsoft, Alphabet, Amazon, Apple and Meta had been much less lively acquirers in 2023 and 2024, Crunchbase information exhibits.

Nvidia was extra lively, whereas Tesla will not be an lively acquirer, in response to Crunchbase information.

Google’s $23 billion acquisition of Wiz would have been the most important deal this 12 months, however the cybersecurity startup backed away from the provide in July, due partly to the regulatory surroundings.

And had synthetic intelligence startups Inflection AI, Character.ai and Adept AI been acquired by Microsoft, Alphabet and Amazon, respectively, 2024 could be trying like a blockbuster 12 months for startup M&A. As a substitute, the businesses went the route of licensing offers as a technique to pay out enterprise traders and in lots of instances, AI groups from the startups joined the general public cloud firms.

Methodology

For this M&A evaluation, we embrace firms which have raised seed, early- and late-stage enterprise capital. Information doesn’t embrace publicly traded firms that had been subsequently acquired.

Please notice that each one funding values are given in U.S. {dollars} until in any other case famous. Crunchbase converts foreign currency to U.S. {dollars} on the prevailing spot price from the date funding rounds, acquisitions, IPOs and different monetary occasions are reported. Even when these occasions had been added to Crunchbase lengthy after the occasion was introduced, overseas forex transactions are transformed on the historic spot value.

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Illustration: Dom Guzman