JMP Group LLC published its findings related to the 2017 cryptocurrency and Blockchain mergers and acquisitions. Researchers also shared their outlook for the current year's expected crypto M&A.
22 October 2018 – The extended cryptocurrency bear market has seen a significant number of organizations searching for new opportunities to expand through consolidations and acquisitions. As per some of the online reports, investors are trying to find a bigger number of deals in the Blockchain sector. Even the declining cryptocurrency prices do not scare entrepreneurs.
JMP Researchers Publish Blockchain Findings
In spite of the high market volatility and dropping Bitcoin’s price, 2017 year has reportedly seen an increase in merger and acquisition activities in the past year as it has been reported by the JMP Securities and PitchBook.
As per the published data, token values that are linked with start-ups have remained associated with Bitcoin instead of being correlated with the actual company value. This can be explained when taking into consideration the fact that Bitcoin is existing for almost a decade.
A specialist consultant on mergers and acquisitions and the head of the blockchain and digital assets investment banking at JMP, Satya Bajpai, has explained such sentiment. He has been quoted as saying:
“Even for great businesses, the value of the token remains correlated to bitcoin, which can create an ideal opportunity for strategic acquirers.”
JMP’s data indicates that mergers and acquisitions are becoming a more popular option when compared to other methods of starting up new companies.
Crypto M&A Will reach 145 by the end of 2018
During 2017, more than 100 cryptocurrency or Blockchain-related deals have been announced. The researchers believe that this figure can reach 145 by the end of the year.
Bajpal states that the current strategy adopted by most of investors is a “land grab” approach. They prefer to buy rather than to build. He says that building takes quite a long time. According to Bajpal, despite the costly option of buying, it is still more favored due to the fact that the acquired entity already has some technology.
He also added that users are onboard almost immediately through an acquisition.
Aside from the benefits, crypto M&A also have some challenges. For instance, thanks to the infancy of the sector, valuations are not that simple. Firms that have raised capitals via initial coin offerings (ICOs) always have to take into consideration the different firms in which the new investors are compensated.
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