Why the Tech Sell-Off is Going to Bring Back BigTech M&A

by Nina Achadjian

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Over the past two years, the market for IPOs has been so strong that most entrepreneurs have shied away from mergers and acquisitions, which in the past used to be a strong alternative for many ambitious startups. This is because the 2021 capital markets were so eager for new tech companies that many traded as high as 57% above their IPO price on their first day as a public company. It seemed that selling your company instead of going public could leave billions of dollars on the table. 

In addition, the market caps of new tech companies in 2021 were so high that selling your company was not a viable option, as even some of the biggest tech players were priced out.

This year these dynamics have changed. Due to the triple threat of rising inflation, Fed rate hikes and reduction of the Fed’s bond buying program, tech stocks have dropped in some cases a whopping 20% to 50% from previous highs, a dip significant enough to open the door to M&A.

Read Nina's full article on Forbes here.

Published — Jan. 24, 2022