Dealmaking is showing signs of life once again, bankers at JP Morgan Chase, Goldman Sachs, and Morgan Stanley say.
Bolstered by stabilizing equity markets and returning liquidity in the debt space, some deals are coming back. Liberty Global and Telefonica tied up their U.K. telecommunications businesses in a $39 billion deal in early May, completing the transaction even as negotiation moved online and into Zoom. Uber meanwhile is reportedly seeking a deal with Grubhub.
But the post-coronavirus M&A environment is certainly different from what it looked like before. Some companies are taking the opportunity to double down on verticals whose toplines are getting an injection in the middle of the coronavirus (à la Grubhub), but have been seeking consolidation for months.
A few takeaways from my conversations with bankers about the future of deals:
- JPMorgan Chase’s co-head of Global M&A Anu Aiyengar says well-capitalized, large companies still have an opportunity to find deals in this uncertain environment. She would not be surprised to see acquisitions of venture-backed tech companies that may have been on a path to an IPO.
- Morgan Stanley’s Global Head of M&A Robert Kindler cautions that regulatory scrutiny means investors should expect smaller deals at lower prices. “I think there are going to be a lot of sellers that lower their price expectations not only because they are worried about a reoccurrence [of a pandemic], but also because there is uncertainty about if this market is too high,” he told me.
- Goldman Sachs’ co-head of Global M&A Dusty Philip has seen clients shift their M&A priorities toward technology and ESG as the lockdowns shift everything online. Philip is expecting to see more stock-for-stock deals, which allow sellers to ride the upside when the economy rebounds.
One thing that is certain: Private equity is looking to play a big role. On Wednesday, Apollo Global Management led an $1.75 billion investement in Albertsons Companies, a U.S. supermarket chain that was struggling with its debt burden—but found relief in a pandemic that has pushed consumers to grocery stores over restaurants. The deal values Albertsons at about $10 billion excluding debt, and gives the company time to pursue an IPO that would give owners such as Cerberus Capital Management an exit route.
Speaking of ESG: Aspiration, a Los Angeles-based fintech company that offers environmentally-conscious deposits and savings products, raised $135 million in Series C funding, per my colleague, Rey Mashayekhi. Aspiration CEO Andrei Cherny told him that March and April were the bank’s “two biggest months ever” in terms of debit card transactions.
Existing venture capital investor Alpha Edison led the round and was joined by the likes of UBS O’Connor, DNS Capital, Radicle Impact, Sutter Rock, and Social Impact Finance.
- ByteDance, the Chinese company behind TikTok, is now valued at $100 billion following trading in secondary markets, per Bloomberg citing sources. The value implies a 33% premium to its last round of funding. Read more.
- Atea Pharmaceuticals, a Boston-based biopharmaceutical company developing therapies for severe human viral infections, raised $215 million in Series D funding. Bain Capital Life Sciences led, and was joined by investors including A Capital Management, Perceptive Advisors, Rock Springs Capital, Adage Capital Management, T. Rowe Price Associates, Redmile Group, and Omega Funds.
- Amwell, a Boston-based telehealth firm, raised $194 million in Series C funding. Early and strategic investors Allianz X and Takeda participated.
- States Title, a San Francisco-based firm using AI to close on real estate deals, raised $123 million in Series C funding. Greenspring Associates led the round.
- Rapid Micro Biosystems. a Lowell, Mass.-based maker of a contaminant testing platform, raised $120 million in Series C funding. Ally Bridge Group led, and was joined by investors including Endeavor Vision and existing investors Bain Capital Life Sciences, Longitude Capital, Xeraya Capital, and Asahi Kasei. Read more.
- Couchbase, a Santa Clara-based maker of a NoSQL cloud database, raised $105 million in Series G funding. GPI Capital led, and was joined by investors including Accel, Sorenson Capital, North Bridge Venture Partners, Glynn Capital, Adams Street Partners, and Mayfield.
- MasterClass, a San Francisco-based startup that sells celebrity-taught classes digitally, raised $100 million in Series E funding. Fidelity Management & Research Company led, and was joined by investors including Owl Ventures, 01 Advisors and existing investors NEA, IVP, Atomico and NextEquity Partners. Read more.
- Nautilus Biotechnology, a Seattle and San Carlos, Calif.-based startup focused on human proteomics, raised $76 million in Series B funding. Vulcan Capital led the round, and was joined by investors including Perceptive Advisors, Bezos Expeditions, and Defy Partners. Previous investors AME Cloud Ventures, Andreessen Horowitz, Bolt, and Madrona Venture Group also participated in the round.
- BetterCloud, a New York-based platform for managing and securing the digital workplaces, raised $75 million in funding. Warburg Pincus led the round, and was joined by investors including Accel, Bain Capital Ventures, Flybridge Capital Partners, New Amsterdam Growth Capital, Greycroft and e.ventures.
- Imperfect Foods, a San Francisco, Calif.-based grocery delivery service of imperfect produce, raised $72 million in Series C funding. Insight Partners led the round, and was joined by investors including Norwest Venture Partners.
- Day One Biopharmaceuticals, a South San Francisco cancer treatment maker, launched with $60 million funding. Canaan, Access Biotechnology, and Atlas Venture were the investors. Read more.
- Omada Health, a maker of virtual and in-person tools for managing chronic disease, raised $57 million from Perceptive Advisors. It will also use funds to acquire digital health start-up Physer. Read more.
- Amplitude, a San Francisco-based product intelligence platform, raised $50 million in Series E funding. GIC led, and was joined by investors including Sorenson Capital and existing investors including Sequoia Capital, Benchmark, Battery Ventures, IVP, and Lead Edge Capital.
- Ecwid, a San Diego-based e-commerce company, raised $42 million in funding. Morgan Stanley Expansion Capital and PeakSpan Capital led the round.
- Xwing, a San Francisco-based company focused on autonomy in aviation, raised $10 million in Series A funding. R7 Partners led the round, and was joined by investors including Thales, Alven, and Eniac Ventures.
- Directly, a startup training customer service chatbots, raised an additional $11 million to close out its Series B at $51 million. Triangle Peak Partners and Toba Capital were the investors. Read more.
- Human Interest, a San Francisco-based 401(k) provider for small and medium-sized businesses, raised an additional $10 million in Series C funding for a round total of $50 million. Glynn Capital led the extension.
- Cinchy, a Toronto-based data collaboration company, raised $10 million in Series A funding. Information Venture Partners led the round, and was joined by investors including ScaleUp Ventures, Techstars, and Manulife Venture Capital.
- Apollo Agriculture, a Nairobi-based financing platform for small-scale farmers, raised $6 million in Series A funding. Anthemis Exponential Ventures led the round, and was joined by investors including Leaps by Bayer, Flourish Ventures, Sage Hill Capital, To Ventures Food, Breyer Labs, Accion Venture Lab and Newid Capital.
- Clara Insurance, a New York-based supplemental benefits provider, raised $5.5 million in seed funding. Two Sigma Ventures led, and was joined by investors including Founder Collective, RGAX LLC, and SymphonyAI.
- Datrix, an Italy-based analytics solution for companies, raised €2.3 million ($2.5 million) in funding. United Ventures led the round, and was joined by Wellness Holding.
- Hudl, a Lincoln, Neb.-based provider of sports video analysis and scouting software solutions, raised an undisclosed amount of funding from Bain Capital Tech Opportunities.
- Lion Capital invested in REX Homes, an Austin-based real estate marketplace for residential real estate buyers and sellers. Financial terms weren't disclosed.
- Bain Capital Double Impact invested in Broadstep Behavioral Health, a Raleigh, N.C.-based provider of programs and services to individuals living with intellectual, developmental or behavioral disabilities. Financial terms weren't disclosed.
- Dyal Capital Partners, a unit of Neuberger Berman, is seeking to raise an initial $2 billion to acquire minority stakes in National Basketball Association teams, per Barron’s. Read more.
- Alibaba, will invest 10 billion yuan ($1.41 billion) into an AI and IoT system centered around its Tmall Genie smart speaker. Read more.
- Lufthansa, the airliner, is in talks with the German government’s economic stabilisation fund over a rescue package of up to 9 billion euros ($9.9 billion), including the state taking a 20% stake in the company. Read more.
- SelectQuote, an Overland Park, Kan.-based which provides an online DTC insurance platform, raised $570 million in an offering of 28.5 million shares (37% insider sold) at $20 apiece. It posted $337.5 million in revenue for the year ending June, and income of $72.3 million. Brookside Equity Partners backs the firm. It plans to list on the NYSE as SLQT. Read more.
- SoftBank Group plans to sell a 5% of its domestic telecommunications business SoftBank Corp worth $3.1 billion, as part of a program to raise $41 billion through asset sales. Read more.
- Intel acquired Rivet Networks, a maker of WiFi and wireless products. Financial terms weren't disclosed.
- Team Whistle acquired Tiny Horse, a marketing services firm focused on helping streamers. Financial terms weren't disclosed.
- Oceanpine Capital Fund II held an initial close of its Fund II with $200 million.
- Founder Collective, a seed-stage fund, closed its newest fund with $85 million. Read more.