Crypto-related merger and acquisition activity has seen big growth this year, CNBC has reported, citing new market data.
While Bitcoin and its digital currency rivals have seen sharp price declines since the start of the year, blockchain and crypto-related deals have surged more than 200% at an annualised rate over the same period. According to data from PitchBook that was compiled by JMP Securities, as of October 15, 115 deals involving digital currency or blockchain had been announced and the number could reach 145 by the end of the year. In comparison, a total of 47 deal that were completed in 2017. According to JMP Securities, a majority of the transactions are global in nature and “relatively small” at less than $100 million.
The lower cryptocurrency prices had contributed to this year’s M&A boom, allowing blockchain start-ups to be purchased or invested in at a discount, JMP’s Satya Bajpai told CNBC in an interview.
“You’re seeing a mispricing of assets,” Bajpai, who is head of JMP’s blockchain and digital assets investment banking unit, said. “Even for great businesses, the value of the token remains correlated to bitcoin, which can create an ideal opportunity for strategic acquirers.”
Bajpai pointed to how M&A had become the prevalent strategy for companies to grow and stay competitive in the nascent, but fast-moving digital currency industry. A growing number of companies rely on acquisitions to obtain innovative technologies, attract talent or gain more users.
“As soon as a company becomes interesting, they get bought — the deal size may still remain small, but the number of deals will increase because that’s the most viable and fastest way to grow in this environment,” Bajpai said, as quoted by CNBC.