Optimistic about 2023, but it is still healthy to feel the end of year 2022 pessimism hit. 🙃

Posted via @desofy

💡Should creators and investors be worried about the slowdown in M&A activity in the crypto space?

Background:
✳️In the first quarter of 2022, M&A activity targeted at VC backed crypto startups reached an all time high of 16 reported deals.

✳️M&A activity has slowed to 7 reported deals in the last 2 quarters.

✳️Galaxy Digital called off its 1.2 billion acquisition of BitGo.

✳️Valuations in the crypto space are generally lower.

My Thoughts:

✅ This slowdown in activity is not unique or symptomatic of the crypto space now being a bad investment—generally all sectors in the US are seeing a significant slowdown in the M&A deal pace.

✅Despite the current slowdown, PE firms are generally sitting on an unprecedented amount of “dry powder” that they are looking to deploy on investments in the near future—so, different than people may assume, the money is there for investments and will invest.

✅Lower valuations is not a bad thing— EBITDA multipliers (how a buyer values a company) were out of control last year (buyers were bidding x17 - x25 EBITDA to win the bid). This is not healthy or sustainable. (X4-x9 EBITDA is generally healthy—depending on the industry)

Conclusions:
❗️There is a slowdown in M&A activity, but I don’t think the “crypto winter” is as correlated to crypto slowdown and future growth and investments as generally assumed.

❗️if you look at overall market trends, valuations needed to go down, money is more expensive, and investors have more of an upper hand so it makes sense a number of deals have died as parties renegotiate business terms.

❗️however, the money/dry powder for future investments is there, expecting investors to start deploying it Q1-Q2 of next year once inflation and the markets stabilize some is a fair bet.

❗️some investors will deploy it now, but they will likely be looking for a deal on their investments because the market generally is slower.

Posted via @desofy

❗️Short-term comforts can lead to long-term dysfunctions.

✳️I used to struggle waking up in the mornings (and honestly still do).
✳️I now set my alarm to be aligned with the sunrise.

💡It was uncomfortable to change my habits—but it was more uncomfortable to stay the same.

✅Watching the sun rise every morning guarantees at least one (1) grounding moment of gratitude, no matter how wild my day ends up.

Question—

In deal work there are three views:

1. The legal view
2. The business view
3. The “practical” view (aka gun to the head—what is actually the liability in terms of being sued?)

At this point, I’ve accepted the biz folks don’t usually care about understanding the legal side and I’ve stopped explaining why I need to fight opposing counsel on this contract clause.

I just tell clients “it matters and let me do me.”

Past pure intellectual curiosity, do any biz folks here feel they are losing out by not understanding the legal nuances?