US companies are more acquisitive. Even less surprisingly, among the top 15 acquirers, over 70% are Silicon Valley companies. This is the main finding from “Startup Transatlantic M&As. US vs EU”, the report presented today at the European Innovation Day conference in Mountain View, the event created and organized by Mind the Bridge and co-organized by EIT Digital.
The research completed by Mind the Bridge and CrunchBase analyses approximately six thousand startup acquisitions performed by US and European companies since 2012. It reveals that US and European companies focus their M&A activity in the US and Europe: 91% of the acquisitions performed by US and European companies – and 96% of the price paid – refer to US and European startups.
“The common wisdom is that acquisitions have played a central role in Silicon Valley’s success, and that buying startups is one of the fastest ways for companies to embrace disruption and keep innovating – Alberto Onetti, Chairman Mind the Bridge, comments – The aim of this report was to understand if these beliefs are actually true. Now the numbers speak for themselves.”
In particular, US companies acquired a number of startups that is significantly higher than EU companies, approximately 4 times more. 4,880 deals out of 5925, in fact, have been performed by US companies representing 82% of all the transatlantic* transactions and investing $504 billion in disclosed transactions. This represents 90% of the overall value invested in startup acquisitions across the Atlantic. Silicon Valley alone registers 1,264 deals (21% of all the transatlantic deals and 26% of US ones) for $118B, more than the whole Europe. The Old Continent accounts for 1,045 deals – 18% of the total – for $57B. The median deal size of US acquisitions is $110M, 1.83 times than the median amount invested by EU companies ($60M).
Additionally, if we look at the distinction between domestic and cross-atlantic acquisitions of startups, it has been reported that US buys prevalently domestic companies (4,300 out of 4,900 total EU/US based startups acquired, 88% on the number of acquisitions, 80% of the value of disclosed transactions). 68% of European startups acquisitions (700 out of the 1,045 total) happen domestically.
To be noted that US startups accounted for just under a third of the number of European startup acquisitions but ate up 59% of the total capital invested. This data suggests, on the one hand, that there is still a gap to be filled in the European startup ecosystem’s ability to produce exits; on the other hand – even more interestingly – US startups are more expensive than their European counterparts (32% of the acquisitions absorbed 59% of the overall amount paid).
“This is the first report doing a comparative analysis of acquisitions looking at Europe and the US. The interdependence of Europe and the US is striking and second only to the dependence of European countries on each other. The findings will inform corporate strategy in both continents”, says Gené Teare Head of Content at CrunchBase.
Remarkably, US companies acquired 562 European startups while 709 startups were acquired by European companies in Europe. That means – consistently with data from SEP Monitor – that 44% of European startup acquisitions have been performed by US companies.
Research introduces the “exits/acquisition ratio” that shows the ratio between the number of exits and the number of acquisitions. Not all ecosystems have a positive balance between the sell (exits) and buy (acquisitions) side. US shows a certain equilibrium with 0.95 while Europe is characterized by a negative M&A balance(1.2): it means that the overall number of startups that have been sold in a region is larger than the ones that have been acquired by regional companies. This situation is clearly evident in the youngest ecosystems (Spain, Italy, the Benelux).
When broken down by city, New York, Chicago and some municipalities of the Silicon Valley (including Mountain View, Sunnyvale and San Jose), and to a lesser extent Los Angeles, Austin and Boston are “net acquirers” of startups (the number of startups acquired is larger than the ones that have been sold), while San Francisco, Seattle and Palo Alto are “net sellers” of startups. Silicon Valley, when considered as a whole, demonstrates a healthy balance (0.95), slightly below the parity.
US and Silicon Valley Run the M&A Show – Not surprisingly the top 15 acquirers in the transatlantic ranking are all US companies. Even less surprisingly, 11 out of the top 15 are from the Silicon Valley. The first European one – Germany’s SAP – ranks 33rd. On average, the top 15 US-based companies acquire 6 times more startups than the top European companies. Altogether, the top 15 most active European companies have acquired approximately the same number of startups that Google bought in the same period.
When broken down by country, the US leads by far with 4,654 exits (79% of the total). The second country in rank is the United Kingdom, that is also leading Europe with 532 startup acquisitions since 2012. UK acquired more startups than Germany, France, Benelux, Spain and Italy combined and shows 3x the number of exits compared with Germany, 4x France, 9x Spain, 13x Italy all did. There is a similar ranking if we look at the countries of the acquirers instead of the acquired companies: the UK is at the top with 471 transactions, followed by Germany (139) and France (120).
Interestingly, 5 out of the top 15 European acquirers are companies founded in the new Millennium. “New economy” companies seem to have a more acquisitive approach than traditional established companies.