The Silicon Valley Bank supported much of the tech start-up community, providing banking services to companies that generally weren’t profitable and could not secure a line of credit or loan otherwise. While the collapse brought a flurry of panic across the economy, there may be a larger opportunity for corporate and private equity M&A dealmaking.
Start-ups in the early stages and in need of cash flow will be looking for exits at smaller valuations now versus what they would have been able to achieve in the past. For CIOs looking to make strategic moves to improve their tech stack or business leaders who have come to rely on some of these organizations to improve processes and efficiencies within their organizations and do not want to see them go, now have the opportunity to make an acquisition.
In addition to ensuring technology companies that organizations rely on do not fail, CIOs and technology leaders have the ability to acquire additional companies that will give them a competitive advantage. For example, the adoption and advancement of artificial intelligence have spearheaded the creation of companies that aren’t yet profitable and could be acquired by a much larger organization with the power and support to implement this technology.
Corporate technology leaders must weigh the benefits and downsides of gaining or losing a potential technology partner they have come to rely on in the past. Would they want one of their direct competitors to acquire them?
Private equity is also in a position to take advantage of the collapse. Because SVB funded many companies that could not fund themselves, those looking to stay in the game need someone to support them moving forward. Organizations will turn to inorganic growth strategies, which places private equity in a prime position to acquire companies with potential.
These innovative technology organizations have the intellect and software to take large companies one step further. Corporations and private equity companies who are able to realize the opportunities an acquisition could bring will benefit in the long run.
Having the right M&A Advisor on their side will ensure business leaders can meet their strategic goals and that transactions go smoothly without interrupting normal day-to-day operations. If you’re considering selling or want more information on how your company can make a strategic acquisition, contact the Aberdeen Team for a complimentary consultation.