What follows is a short summary of our research report about M&A activity in the cryptocurrency space. The full version can be downloaded for free:
1H20 Deal Flow
42 acquisitions involving cryptocurrency and blockchain companies have taken place in the first half of 2020. At the start of the year, our industry survey had a majority of participants forecast a significant pick-up during 2020. While deal activity in Q1 was promising, we’ve seen a pull-back in Q2. Nonetheless, activity is on track to match 2019 despite the Covid-19 crisis.
We estimate that deal value in the first half of 2020 has already matched 2019. The main reason for this increase is the re-emergence of large nine-figure transactions, mostly absent in 2019. The best example is the $300-400M acquisition of CoinMarketCap by Binance
Crypto Exchanges & Decentralized M&A
Exchanges and other trading-related companies were the most active strategic buyers in the first half of 2020.
Moreover, while we have not seen an actual case of “Decentralized M&A” yet, there have been deals involving protocols and ICO-funded teams.
Download the full report for an in-depth analysis on these topics.
Following up on our landmark M&A research piece for 2019 we provide a few insights on what’s been happening so far this year.
There has been a slowdown in Crypto M&A activity, contrasting our initial expectations and those of industry executives and investors. Nonetheless there have been a few notable deals:
- Circle sold its retail business to crypto broker Voyager continuing its divestment program
- Bakkt bought loyalty solutions company Bridge2 which is remarkable since Bridge2 is a non-crypto company
- Kraken bought Australian exchange Bit Trade in another consolidation power move by the high profile exchange
- TRON acquired DLive (video streaming) and Steemit (blockchain social network)
Key industry executive M&A Survey
Over the past month we have collected the views of key industry executives and investors and have summarized the findings in a new report that you can download on our research portal:
- 2020 will be the year of M&A: A majority of all survey respondents expects 2020 M&A activity to outpace 2019.
- >75% of founders were involved in M&A discussions: We were surprised to see that such a large majority of founders were active on the M&A front – both as targets and buyers. However, most of these discussions didn’t end up in actual deal activity. This is from A-list entities, and we can only guess how much is going on at the long-tail of crypto startups.
- Deals “bounce” because of many reasons that are not about price: Whereas analysts will often focus on the price of a deal, founders have reportedly turned down offers due to non-economic reasons such as branding and the need to relocate their business.
- What data room? The “wild west” image of many crypto startups is visible in some deals not closing due to targets being unable to pass basic due diligence procedures.
- Will the Goldman Sachs of Crypto please stand up? Most deal activity and advisory is done in-house, or by executes of the large incumbent companies. When asked about influential dealmakers, survey respondents failed to mention an independent crypto M&A dealmaker.
- When Decentralized M&A: 1 in 5 respondents thought that there will never be a case of Decentralized M&A (e.g. protocol takeover, independent of centralized party)
More in-depth updates will be available in the next edition of our State of Crypto M&A report which is due later this month.