Founders Essentials:
Q4 2024

Topic of the Quarter

The Curious Case of the Missing IPOs

The stock market is roaring back to life, yet the IPO market remains strangely subdued. While late-stage venture funding has retreated from its 2021 peak, it is still robust and appears to have filled the void left by the IPO slowdown. This curious disconnect has significant implications for the broader financial landscape, particularly for M&A activity.

Why should this matter? Historically, a vibrant IPO market fuels a surge in M&A. Public companies tend to be more acquisitive, bringing greater energy and resources to the M&A process. Moreover, private companies are more receptive to receiving stock as consideration in a transaction when public market valuations are more reliable. Newly public companies often embrace a blend of organic and inorganic growth strategies, further stimulating M&A activity.

So, are we concerned by this IPO lull? Not necessarily. We believe a robust IPO market will inevitably return. Consider the 1,000-plus tech unicorns minted during the 2021-2022 boom, many of which are now facing a challenging environment. As articulated well by others (see here), this cohort faces pressure to demonstrate their staying power. We anticipate that some high-quality companies will emerge from this group (i.e., some zombies will resurrect) and pursue public listings, joined by a new wave of promising ventures, such as in the burgeoning field of AI.

Several factors seem to contribute to the current dearth of IPOs. First, many companies secured substantial funding during the boom, reducing the immediate need to tap public markets. Second, an IPO would likely require companies and their investors to acknowledge valuations below their previous highs. Finally, late-stage private capital is mostly available for strong companies, offering a temporary lifeline.

However, we believe this dynamic is poised to shift. As pioneering companies brave the IPO waters and achieve successful public valuations, others will be emboldened to follow suit. The allure of higher liquidity, enhanced access to capital, and the potential for strategic acquisitions will prove irresistible. This is the natural rhythm of a healthy IPO market – a period of consolidation and recalibration followed by renewed enthusiasm and growth. We are simply navigating an unusual moment of pause before the next wave of IPOs invigorates the market.

 

Note: Data includes only North American tech deals. 2024 values represent projections based on the performance observed through September.

Source: Pitchbook

 

 

Founder-Led / Bootstrapped Deal Activity Snapshot

Q3 2024: Notable U.S. based M&A deals in Tech

Autonomy/IoT
  • 9/5 – Syxsense, vulnerability platform for IT operations, acquired by Absolute Software. Link
  • 8/6 – Sewio Networks, real-time location tracking system, acquired by HID Global. Link
  • 7/26 – Ghost Robotics, developer of legged robots, acquired by LIG Nex1 for $240M. Link
  • 7/17 – Triax Technologies, IoT worksite platform optimizing safety, acquired by Invixium. Link
  • 7/2 – SWIR Vision Systems, short-wave infrared camera image sensor technology, acquired by onsemi (NAS: ON). Link
Big Data & AI
  • 9/19 – EZOPS, data control and automation developer, acquired by NeoXam. Link
  • 9/12 – eClinical Solutions, data visualization and analytics platform for medical professionals, entered into an agreement to be acquired by GI Partners. Link
  • 9/6 – Cesium, geospatial mapping platform, acquired by Bentley Systems (NAS: BSY). Link
  • 8/24 – Statsbomb, database software for team analysis, acquired by Hudl. Link
  • 7/23 – Molecula, data virtualization software, acquired by Circuit. Link
Data Center
  • 9/24 – Clumio, enterprise data center and public cloud protection software, acquired by CommVault (NAS: CVLT). Link
  • 8/30 – Morpheus Data, software for management of multi-cloud and hybrid IT environments, acquired by Hewlett Packard Enterprises (HPE). Link
Software
  • 9/23 – Drop Mobility, bike-sharing platform, acquired by The Sharing Group. Link
  • 9/2 – Sonio, AI-based fetal ultrasound software, acquired by Samsung for $93M. Link
  • 8/20 – Book4Time, business management software for hotels, casinos, etc. acquired by Agilysys (NAS: AGYS) for $150M. Link
  • 8/13 – Autofleet, vehicle as a service platform, acquired by Element Fleet Management for $110M. Link
  • 8/13 – Skuad, platform designed to build technology teams anywhere, acquired by Payoneer (NAS: PAYO) for $61M. Link
  • 8/5 – Influential, influencer marketing platform, acquired by Publicis Groupe (PAR: PUB) for $500M. Link
  • 8/1 – SupplyPike, supply chain management software, acquired by SPS Commerce (NAS: SPSC) for $206M. Link
Professional Services
  • 9/25 – Wisetek, provider of IT disposition services, acquired by Iron Mountain (NYS: IRM). Link
  • 9/19 – NetServ, provider of AI and technology operation solutions, acquired by Gruve. Link
  • 9/11 – Excelicon, provider of cybersecurity and business advisory services, acquired by Strategic Innovation Group. Link
  • 9/10 – CodeScience, provider of custom salesforce services, acquired by Bridgenext. Link
  • 8/30 – Voltatus Aerospace, provider of integrated drone solutions, merges with Drone Delivery (TSX: FLT). Link
  • 8/13: Logic Systems, provider of cloud infrastructure and managed services, acquired by Accenture (NYS: ACN). Link
eCommerce
  • 9/19 – Scout & Cellar, operator of a DTC winery, acquired by Full Glass Wine Co. Link
  • 9/16 – Deliciously Ella, plant-based food and wellness platform, acquired by Hero Schweiz. Link
  • 7/25- Packed Party, lifestyle gifting company, acquired by BioWorld Merchandising. Link
  • 7/24 – Winky Lux, online platform providing natural beauty products, acquired by CORE Industrial Partners. Link
  • 7/10 – Beauty Bakerie, manufacturer of cosmetic products made from vegan-friendly substances, acquired by West Lane Capital Partners. Link
  • 7/4 – Wedderspoon Organic, producer of organic honey and other products, acquired by Florenz and Masthead Resources. Link

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

About La Honda Advisors

LHA is an investment banking boutique focused on achieving exceptional M&A and financing outcomes for our clients. Our clients are the innovators and technology leaders who build great companies and seek more creative, nimble approaches. While based in Silicon Valley, our reach is global.

For more information on La Honda Advisors, please visit our website here or contact our Partners: