Deals are back—and booming.
This essay originally appeared in Data Sheet, Fortune’s daily tech newsletter. Sign up here.
As we headed into 2016, we thought it would be an ugly year for tech deals. That much was clear after venture capital deal volume tanked in the fourth quarter of 2015. IPOs slowed to a halt and startups began heeding all those “sky is falling” VC warnings about burn rates by laying off workers and scaling back growth plans.
But it’s starting to look like those warnings might have been overblown.
Most early and mid-stage venture capitalists I talk say there’s been no change to their pace of dealmaking. Yes, fewer billion-dollar startup unicorns are getting their horns, but that’s on purpose: Betterment CEO Jon Stein told me earlier this year that he preferred “clean” deal terms at a lower valuation over the unfriendly liquidation preferences that came with unicorn status.
Meanwhile M&A is booming. This year’s $50 billion worth of tech deals is already double all of 2015. Many observers see Microsoft’s msft $26 billion deal for LinkedIn lnkd and Salesforce’s crm $3 billion deal for Demandware as the beginning of an M&A frenzy in the tech sector. Barron’s recently named Yelp, Shopify, Groupon, Angie’s List, Criteo, TubeMogul, and Rocket Fuel as takeover targets.
Beyond that, private equity firms are snapping up tech companies at an unprecedented clip. According to the Wall Street Journal, tech companies made up 46% of all buyout deals this year, the highest level since Dealogic began tracking deals in 1995. (In 2011, tech made up just 11% of buyout deals.) Blue Coat Systems, Veritas, Informatica, Qlik Technologies, Marketo, Cvent, and Dell are all owned by PE firms. Soon Yahoo could be, too.
But most notably, IPOs are back, or at least, possible. Shares of Twilio, a communications software startup, shot up 92% on their first day of trading. Line, the Japanese messaging app company that’s expected to go public this month, recently raised its price range because of high demand. Both bode well for a stronger IPO market in the second half of the year.
Startups may be laying off workers, but at the tech-focused investment banks, business is good.