Last year closed on a high note, with global M&A value reaching the third-highest level on record at US$3.53 trillion. On the IPO front, several of the largest “unicorn” companies are gearing up to go public this year.
To understand what dealmakers expect from the M&A market in the coming year, Mergermarket on behalf of Toppan Merrill spoke with six experts.
Toppan Merrill question: A number of large tech companies will likely IPO in 2019 after outstanding tech IPO performance in 2018. In your opinion, does the market risk oversaturation with so many expected debuts, or will demand remain high? Leading industry experts weigh in...
Alex Wellins, Blueshirt Group says: That question has been asked specifically about, for example, Uber and Lyft: Is there room for investors to buy both or will they choose just one? Based on what we're seeing, and by the volume of both private money and institutional money out there that will buy into these IPOs, we do not think there is a risk of oversaturation.
And again, while we are on an upward trajectory for technology IPOs at the moment, if you look back 10 years, we're still at lower numbers now compared to that time. The phenomenon of deal fatigue - if there are too many technology IPOs on the road at any one time – is real. But based on the pace we've seen of 40 to 50 tech IPOs per year, that would still be relatively low historically and we don't think that’s enough to cause investor fatigue. The bottom line is that as long as tech IPOs keep performing as an asset class, there's going to be strong institutional investor demand.
Geoffrey Baldwin, GCA adds: To be honest, I don't think the appetite for technology IPOs is driven by saturation. There is so much capital in the marketplace today that appetite is driven more by the economics of the deal, valuations, and having a stable market price for the debut.