Tech advisory boutiques are small and nimble by definition, and right now, that's a fine definition indeed. With venture capitalists tightening their purse strings, they and the execs at their portfolio companies are much more willing to contemplate an M&A exit, and seek advice.
GrowthPoint Technology Partners, a tech boutique founded in 2005 by several bankers from the former SVB Alliant, said in a note Tuesday evening that strategic buyers are wiser after living through the tech downturn of eight years ago and have clean balance sheets and strong cash positions.
Deals are taking longer to get done (six to eight months), but they are happening, GrowthPoint said (we were told
a similar thing by the bankers at Updata Partners back in November). GrowthPoint pointed out that it advised Q-Layer, a cloud computing startup, in its
sale to Sun Microsystems Inc. [
JAVA] in January for undisclosed terms.
The Palo Alto, Calif.-based boutique, whose average deal size is around $70 million, separated buyers into three categories. A quarter of potential acquirers are conservative; they are evaluating deals with an eye toward pulling the trigger once an economic recovery begins. Twenty-five percent of potential buyers are considered aggressive. They are "actually looking for higher deal flow in terms of absolute number of deals," GrowthPoint said. The balance of buyers haven't changed their buying habits in light of economic conditions.
While there is an obvious reduction in the number of deals and their price tags, "we do not expect to see a return to the 2002/2003 situation when technology M&A decelerated dramatically," the note said. With no securitized mortgages or bad loans on their books, GrowthPoint and its boutique brethren should be in position to continue scoring mandates.
- Olaf de Senerpont DomisSee November 2008 post on Updata Partners from Tech Confidential
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