Turbo Talks: Insights Into IPOs and Mergers & Acquisitions

Jamie Montgomery with Nat Goldhaber

On Wednesday September 15, my partners and I joined 22 of our portfolio companies and the Claremont Creek hosted speaker– investment bankers Jamie Montgomery, Eric Wagner, and Jason Yip– for our second Turbo Talks event this year. Turbo Talks refers to the gathering we created for our portfolio where we discuss timely topics of interest to many of them. During Turbo Talks, we get acquainted with each other and build networks, while simultaneously enjoying some fun together. We accomplished everything in spades Wednesday at the San Francisco Epic Roasthouse, where we ate great food and drank Merry Edwards wine while viewing the sunset-lit San Francisco Bay.

View from Epic Roasthouse

And, yes, we gleaned some valuable insight as well. Our market-smart and always entertaining speaker Jamie Montgomery is CEO of Montgomery & Co, a leading investment banking firm that provides services to growth companies globally. Jamie founded the firm and is a well-recognized industry expert and advisor to startups about capital formation, new market entry and strategic alliances.

Jamie noted that there have been far more acquisitions of VC-backed startups than startup IPOs in 2010. And next year will be particularly hot. Jamie predicted that the number of acquisitions will soar to 900 – well above 2010 and twice the peak between pre-recession years 2005 and 2007. He predicted a greater percent of venture-backed exits will be M&A transactions over the next five years.

We believe this prediction as well. After a period of relatively slow M&A activity, conditions are ripe for startups to attract strategic buyers. Prospective buyers have been sitting on cash, and their new product cupboards have grown bare at a time when demand is clearly increasing. A lot of public technology companies have acquired other public technology companies this year, but there have been fewer acquisitions of startups. That’s because many are below the radar screen, but that will be changing quickly.

Jason Springs
CEO of Geneweave Biosciences

Jamie believes that a lot of startup CEOs no longer care whether they ultimately head a public company. If they avoid an IPO, they also avoid quarterly Wall Street conference calls, not to mention the fact that many public companies don’t ultimately fare well. That’s why their stock prices are commonly lower a year after they go public.

The Montgomery team of Eric Wagner and Jason Yip also lead the attending portfolio executives through a case study exercise. The team presented two scenarios concerning a situation some companies find themselves today—evaluating a potential acquisition. The portfolio executives and the Claremont Creek team had to discuss the scenarios called A and B and then determine what scenario they thought would be best. They also had to identify what the next steps would be, and respond to the top three issues and then present their recommendation to the Board.

Lots of discussion happened during the approximate 60 minutes when everyone had a chance to debate one side or another. Neither scenario won the unanimous support of the group, but it was really a fun and challenging way to spend a night among a lot of Type A individuals.

The Claremont Creek Turbo Talks events are only open to our portfolio companies, but we plan to share the perspectives of our speakers in our blog. So stay tuned for more Turbo Talk insights in future posts.