International Companies & US Start-ups

Currently about 60% of tech M&A crosses borders, and valuations for those cross-border deals are 17% higher than domestic deals. Innovation is happening almost everywhere, creating a mass of emerging startups, and international buyers are very active. However, most of international activity has involved relatively mature targets, as opposed to new ones. This is largely because international buyers don't have zip code synergies; they often don't have the people and infrastructure nearby to help startups grow. Thus, later stage companies are a safer bet. The problem for global players is that unless they compete for early stage companies, they risk losing ground to their US competition.

Buyers typically acquire startups when they want a team, IP, and early access to an emerging market opportunity. International buyers also seek out deals that give them access to a technology that has application in their home market. For example, our client Rapid Blue developed a new way of tracking foot traffic in retail outlets using a mobile phone as a sensor. Rapid Blue's progress in this area outstripped the technologies available outside of their home market. ShopperTrak bought Rapid Blue and will now deploy them globally. As technology adoption follows different curves in different areas, smart buyers will continue to pick up advanced tech in other markets and bring it home.

Posted by , on 24 June 2014
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