State of Crypto M&A: Update & Survey

Wednesday, March 4, 2020

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.

M&A slowdown

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. 

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