Sometimes, no one is buying. Other times, everyone is spending big.
This week clearly belongs in the latter category for tech and life sciences M&A. Acquirers shelled out nearly $8 billion in disclosed-price acquisitions in industries from generative AI to payments to legaltech.
Several deals exceeded the billion-dollar mark. This includes the biggest buyer, IBM, which is paying $4.6 billion to purchase Apptio, a provider of financial and operational IT management software, from private equity owner Vista Equity Partners.
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Next up is Databricks, which is acquiring MosaicML, a provider of generative AI tools for developers, in a transaction valued at around $1.3 billion. It’s a particularly big number considering San Francisco-based MosaicML emerged from stealth less than two years ago.
The other 10-figure deal was Visa’s purchase of Pismo, a digital banking technology platform, for $1 billion in cash. Pismo, which has operations in Latin America, Southeast Asia and Europe, previously raised at least $118 million from backers including SoftBank, Amazon and Accel.
Altogether, per Crunchbase data, there have been at least 23 acquisitions this week of companies that previously raised known venture or seed funding.1 We list them below:
Possible catalysts for a deal spree
There’s no obvious reason why this week was so busy for tech M&A. However, some possibilities come to mind.
First off, it is the last week of the quarter. Acquirers, many of which are public companies, might have determined it necessary or preferable for financial disclosure reasons to announce consummated deals before July 1.
Second, surging interest in artificial intelligence is driving some of the dealmaking. The sector accounts for at least two of this week’s larger deals: MosaicML and Thomson Reuters’ $650 million purchase of AI-enabled legal research provider Casetext.
Third, the largest public acquirers are in a good place with their shareholders. IBM’s share price has been less volatile than most other tech players over the past few quarters, with a recent market cap over $120 billion. Visa and Thomson Reuters, meanwhile, are not too far off their all-time highs.
Pickup follows slow times for M&A
While this was an action-packed week for M&A deals, 2023 overall has not been shaping up as a busy year for acquisitions.
In the first quarter of the year, the number of disclosed M&A deals for venture-backed startups globally slipped 31% year over year to 491, per Crunchbase data. Overall, the number of startup acquisitions has been trending down for several quarters.
For Q2 2023, preliminary data suggests M&A activity was also somewhat muted, even with this week’s dealmaking uptick. Still, there were some big transactions, such as mobile game developer Scopely’s $4.9 billion April acquisition by Savvy Gaming Group.
Perhaps this week is an indication that predictions of a rise in M&A deals for venture-backed startups this year were premature rather than flat-out wrong. With large-cap tech acquirers largely flush with cash and trading at historically robust valuations, there’s clearly a strong pool of acquirers out there. And with venture funding down and the IPO market still sluggish, there are also plenty of startups that would be quite open to making a deal.
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Illustration: Dom Guzman
Query included both private and public companies that previously raised seed or venture funding.↩
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