Tech M&A Rises to 2000 Levels

As reported in the NYTimes DealBook, merger mania that gripped the world during the dot com bubble seems to be making a comeback. Fueled by Facebook's two big acquisitions, the dollar volume of tech deals is up 90 percent worldwide, to $65.2 billion, year over year, according to Thomson Reuters data. This is the highest it has been since the year 2000.  The ten biggest tech deals of the year all involve acquisitions of American companies, the biggest of which has been the purchase of WhatsApp for $19 billion. The WhatsApp acquisition is the fifth largest tech deal ever, according to Thomson Reuters. Technology is hot right now, and looks to be picking up steam. We've received more inquiries from technology companies this year than we typically do. Not everyone is excited about the tech boom, however. Castlight recently went public in an offering that defied traditional valuation metrics; the company's valuation soared to more than $3 billion on 2013 revenues of only $13 million. Yahoo! finance called it the worst IPO of the century. So, where does this leave the rest of the market? As with any bubble, everything is rosey until something pops. With the momentum tech has built so far this year, it wouldn't surprise us to see more large deals over the next 9 months of the year. However, if valuations continue to defy historical measurements and reality checks, watch out - the last time companies without profits were going public at incredible multiples (dot com bubble), the market correction was harsh and swift. Read the original article from NY Times DealBook here.

Twitter Valuation Indicates Huge Growth Potential

November 7, 2013 09:49 by Clayton Reeves in Capital Markets  //  Tags: , , , , ,   //   Comments (0)
It looks like all eyes are glancing to the NYSE today, to see if the stock exchange can pull of the IPO of Twitter without the glitches and issues that plagued the Facebook IPO.  As reported by Dealbook, shares were priced at $26, making the valuation stand at more than $18 billion. The company will raise $1.8 billion from the offering, which should provide quite a pile of cash for acquiring new technologies and expanding into new markets. At this valuation, each Twitter user is worth an average of $78 - although I would estimate that Lady Gaga's account is worth quite a bit more than mine to advertisers! All things considered, the IPO has gone well for Twitter. However, in the harsh present day reality that internet companies live within, one misstep can spell real trouble. After all, Twitter has lost $300 million over the last three years, and probably won't show profits until 2015. If their users decline, or their revenues slack off estimates, it will be difficult to maintain this lofty valuation. Even so, investors are excited, and Twitter's pockets are lined with cash - the tell tail signs of a successful IPO. Read the entire article here.

Past Posts