mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

Poor Old Bankers

70% of tech M&A deals worth over $100 million this year have been done without the use of an investment bank, points out Dealogic.

One reason is that the deals’ valuations are so bonkers that banks’ metrics for evaluating and negotiating deals are irrelevant.

Another reason is that the bankers are leaving banks for tech and the tech companies have their own in-house banking advisers.

Examples of deals without banks’ involvement are:

Apple’s $3 billion purchase of Beats,
Facebook’s $2.3 billion purchase of Oculus VR this year, 2012 $700,000 purchase of Instagram, and $19 billion purchase of WhatsApp.
Oracle’s $5.3 billion purchase of Micros Systems, and it’s $2.1 billion purchase of Taleo
Microsoft’s $8.5 billion takeover of Skype in 2011 and $1.2 billion 2012 purchase of Yammer,
HP’s 2010 $1.7 billion purchase of ArcSight,
Yahoo’s $1.1 billion 2013 purchase of Tumblr,
Google’s 2013 $1 billion take-over of Waze, $228 million purchase of Slide, and $3.2 billion 2014 purchase of Nest.
Cisco’s $590 million purchase of the Flip video camera. Cisco has bought so many companies – 170 – that it finds it cheaper to have its investment banking expertise in-house.

Mind you, when these deals are done, according to the Silicon Valley TV series, over mobile phones with valuations plucked out of thin air, why should anyone need a bank?

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2 Comments

  1. david manners
    August 21, 2014 14:15

    Well they say the bankers are migrating to tech Silverman and clearly they are bringing their concept of funny money with them.

  2. Silverman
    August 21, 2014 12:02

    Exactly right. The valuations are stupid enough not to meet any banking investment criteria (however loose).
    They are arrived at rather to allow the VCs to exit with a tasty profit. The boards give each other high valuations rather like how they “independently” consult each other on executive pay grades.

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