small or growth companies; as a result, growth-stage companies looking for an exit will need to be even more aware and strategic as they position themselves and their technology to drive value. As always, those who deserve it will continue to see the benefits, because record-level reserves continue to remain on the sideline in the coffers of both corporate and institutional investors.
Given the large number of acquisitions undertaken by technology leaders in recent years, it’s only prudent that shareholders and upper management take some time to ponder the very real possibility that there could be a slowdown in M&A activity on the lower end of the ecosystem as more strategic M&A takes place at the upper end.
This theory could turn out to be incorrect, however, if the IPO markets return and a new breed of acquirer with newly raised capital reserves funds the activity.
When all is said and done, though, this could well prove to be a buying opportunity for private equity, venture capital, and spin-out investors who want to rekindle the intellectual property that was acquired and ignored by some of the larger technology entities. In retrospect, many of the big players just didn’t have the focus, internal ability, or entrepreneurial energy to get these breakthrough ideas across the goal line-something fresh capital and renewed effort could accomplish.
Establishing strong strategic relationships with corporate development leaders is key to making these investments work. So is understanding that it’s often just poor execution, or lack of an internal champion, that holds back very promising IP in a corporate environment.
It’s also important to note that many deals in recent years have bundled talent along with IP, and those teams may now be tired of the corporate culture and looking for a new home for their innovation. Finding IP-as well as a talented team conversant with the breakthrough-should be a central focus for any new investment strategy.
The year is still rich with M&A possibilities, promise, and potential. But it’s imperative to understand these core market dynamics and background trends, which are playing out quite strongly, in order to fully succeed.