Good Wednesday Morning,
Daylight – Since I worked with both companies, Broadcom and Brocade and know their cultures are as different as night and day, and they have hated each other for two decades, when I heard they were in talks to do a merger, I chuckled and said another fishing expedition by bankers looking to stay employed. Well, they are catching fish and making a killing, because that deal now will close by the end of the week. The trend line is that companies have decided to throw the towel in on the development of new products and services. CEOs and Entrepreneurs see technology race past them before they get their stuff on the street. Broadcom and Brocade for years produced great innovation, driven by the desire to win and beat the other guy.
Live Rounds – Now, they will join forces and the question is will these two rivals join in a holy alliance and live happily ever after producing great products for the chip industry? My guess – there won’t even be a honeymoon period where there is some sort of harmony between the two working together side by side. In fact, they will not even have a long weekend of dating at the cabin beyond the deal toys and gifts given to CEOs and CFOs at a deal-closing dinner celebration. The next morning, the two companies go back to work and start fighting over who gets what, when, where and how – that becomes the business – not exactly a “bolt on” where merging often makes sense. Somebody should start a consulting business to talk companies out of deals.
Buzzard’s Roost – Look no further than Microsoft and LinkedIn to see how a buyout dries up innovation and product growth. The unintended positive consequence is the results are so bad, it gives Entrepreneurs a big chance to start and grow to $100 million without hardly being noticed. Broadcom and Brocade were deadly competitors – together, pushovers. Broadcom’s founder and CEO lived in an underground dungeon, where he said he could focus on how to beat Brocade’s business into the ground. Turned out, he did a few other things. I always wondered why he never invited me.
M&A – Last year was a record year for M&A with $4 trillion worth of deals. There’s little chance of topping that figure this year, but dealmakers tried their hardest in October. Evercore Partners is on fire, as they have advised on deals worth nearly $82 billion combined in the past week alone. Almost half of the top ten deals of the year have happened in the last 11 days.
Hot – Cats and Deals: Both have Nine Lives – Yesterday, a bunch of media outlets reported that after months of rumors and speculation, DraftKings and FanDuel, the two well-funded fantasy sports betting startups, were finally, really, truly about to merge after the deal has been off-and-on at least 10 times. Each CEO, like a child, is fighting over the small stuff, such as who gets what office, etc. If this deal is done, skip the deal-closing dinner celebration and the deal toys for the boys.
Investment Banking – Stay with me and take a dive into what “I’m for sale 10 years too late” looks like. – Angie’s List put out the signal of “strategic options.” By the way, bad and lazy choice of two words when things are headed south. The company said it hired financial advisers to review its strategic options, as it continues to work on a turnaround and seeks new opportunities. The online marketplace for home-improvement and other services made its announcement, as it reported third-quarter earnings, showing a jump in new memberships, but a wider-than-expected loss. The company said it had a net loss of $16.8 million, or 28 cents a share, in the quarter after net income of $100,000, or breakeven, in the year-earlier period. Revenue fell to $79.7 million from $86.9 million. The FactSet consensus was for a loss of 12 cents a share and revenue of $82.2 million. Chief Executive Scott Durchslag said the company attracted 1.6 million new members since it removed its reviews paywall and added 1,367 service providers. All that said, EBITDA is down year-over-year, so financial results are lagging as often happens when changing business models. Shares are down about 18 percent in the year to date.
Spotlight – Our Nashville member Bonner Black returns Friday to play at our Entrepreneur Briefing at IDR HQs. She is singing up a storm in Nashville, but also is thinking and working on a disruptive business model for entertainment. I always noticed she took a lot of notes, but I thought she was writing songs.
Deal Stream>>>>>>>>>>>>>>>>>>>>
Exits – Morsco, a plumbing equipment distributor, has acquired underground water distributor Fortiline Waterworks.
TorQuest Partners has sold Global Traffic Technologies, a traffic-control software developer, to Gilbarco.
Bertram Capital has acquired Trademark Global, a retail supplier, from Blue Point Capital Partners.
Venture Capital – Postmates, a delivery startup, has raised $140 million.
Freshdesk, a multichannel support provider, has raised $55 million.
Cross River Bank, a financial services company, has raised $28 million.
Otonomo, a connected car startup, has raised $12 million.
Emissary, a service that connects salespeople with executives at companies they are targeting, has raised $10 million.
CounterTack, an enterprise cybersecurity company, has raised $10 million.
Hubble Contacts, a direct-to-consumer contact lens startup, has raised $7.2 million.
Gauzy, a startup that produces glass crystals used in technology glass screens, has raised $7 million.
Nurx, a drug prescription and delivery app (and Y Combinator alum), has raised $5.3 million.
Replicated, a service that helps SaaS companies extend their services beyond the cloud, has raised $5 million.
Hungry Marketplace, a service that connects professional chefs with consumers, has raised $2.5 million.
Lilt, a machine translation service, has raised $2.35 million.
GoMeta, an augmented reality app, has raised $2 million.
UserIQ, a software company focusing on customer acquisition and retention, has raised $2 million.
Tecovas, a direct-to-consumer western boot company, has raised $1.8 million.
USRealty.com, an online real estate company, has raised an undisclosed amount new funding from Third Prime Capital.
Private Equity – Team Health Holdings, a staffing provider, has agreed to be bought by Blackstone.
Francisco Partners and Elliott Management Corporation have acquired Dell Software Group, a former business unit Dell Inc. and formed two new entities that will operate separately: Quest and SonicWall.
Duran, a Borosilicate glass manufacturer, has acquired Kimble Chase, a laboratory glassware manufacturer, from Gerresheimer and Chase Scientific Glass for $131 million.
And that’s what’s ahead, Cliff
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The post Deal Toys for the Boys, Angie’s List Up for Grabs, Cats and Deals Nine Lives, Bonner Black is a Singer and Disruptor appeared first on Oxford Entrepreneurs.