In the small startup M&A market, maybe 50% of deals are falling through? Of the 50% that don't fall through, the vast majority are closing only after being renegotiated in the last hour, e.g. buyers promising to pay $x, but in the last hour the buyer changes their offer to $x/2.(These are deals with zero regulatory review)
Most common issues is buyers backing out because they couldn't secure the debt to finance the deal like they expected they could, multiples decreasing in the market, investor sentiment shifting away from riskier tech ventures, etc.
If those trends in small company M&A also apply to large company M&A, the parent's hypothesis is very valid.
Where are you getting those numbers from? The valuations of small acquisitions are closely held information; afaik there is no place to just look this stuff up.
1st hand info / network. I'm a CEO. YC Founder and Techstars founder. My CFO is a fractional CFO that works with other startups clients, same stories.
This kind of information and what really goes on behind the scenes is rarely revealed. Mainly because if I told you about the shitstorm story of a top tier VC trying to buy my company and the deal exploding, that VC will do everything in their power to bury the story and make sure I'm personally not able to operate in the industry in the future.
The people at the top of tech are cut throat individuals. (And the people at the "top of tech" are not CEOs... they're the investors. The people who sit on boards who you never hear about. And that's the way they like it)
Thanks. I've sold two companies, and gotten a pressurized squeeze from a major player (which we said no to - we were profitable so didn't have runway problems), but I've never heard of dropping an offer valuation at the last minute.
I can give you one worse: a board member (and deal lead, from <redacted> Ventures) telling me there are only 3 people on the board.
3 months later a month before the deal is supposed to close, 2 more board members come out of the woodwork and shut the deal down. No idea they were on the board. Was outright lied to. (I have the call recordings to back that up)
Mind you these are top tier brand-name VCs. They hide behind their reputation, and it works because people like me are extremely hesitant to write comments like this calling out specific firms and people.
ugh sorry to hear that. That squeeze I mentioned before (lowball offer at "this is what it will cost us to copy you") was, thankfully, for a company that we bootstrapped so we had no VC pushing us to close. And we bootstrapped because of my experience at my previous, VC-backed company.
In the small startup M&A market, maybe 50% of deals are falling through? Of the 50% that don't fall through, the vast majority are closing only after being renegotiated in the last hour, e.g. buyers promising to pay $x, but in the last hour the buyer changes their offer to $x/2.(These are deals with zero regulatory review)
Most common issues is buyers backing out because they couldn't secure the debt to finance the deal like they expected they could, multiples decreasing in the market, investor sentiment shifting away from riskier tech ventures, etc.
If those trends in small company M&A also apply to large company M&A, the parent's hypothesis is very valid.