In recent years, mergers and acquisitions (M&A) have turned out to provide many of the most successful exits. In fact, the number of exits through venture M&As exceeds the number of exits via IPOs, and hence the importance on this topic in this book.
The size and scope of the deals are also important for entrepreneurs, since there is an intimate connection between the scope and value of announced acquisitions and the amounts and fields of investments made by venture capitalists in the following periods.
As a by-product of the phenomenon, companies which are just starting out are focusing on developing their technologies with an eye to attracting leading companies to regard them as a desirable investment. The scarcity of companies which are able to achieve independently the status of world leaders in their field is another incentive to entrepreneurs to plan for the sale of the company, rather than attempt to establish a large independent company.
The dramatic meltdown in capital markets since the second half of 2000 had significantly affected the scope and thus the prices of M&A activities. In addition, following the general economic slowdown, it is clear that most of the acquisitions conducted in the recent years did not fulfill the buyers' expectations.
However, perhaps more than before, a thorough understanding of the various M&A alternatives and related procedures is becoming an important aspect in the investment decision, and in the venture development planning.
This part of the book discusses the strategic aspects of mergers, acquisitions, and spin-offs alongside the practical aspects of planning and executing a sale, including highlighting the primary economic and legal aspects of mergers, acquisitions, and spin-offs.
This part of the book also deals with another aspect of exits, which is more unfortunate, the bankruptcy and possible dissolution of the venture.