Christopher Cain on Tech M&A Activity – 'VC firms need to have that release valve'

Foley & Lardner LLP partner Christopher Cain assessed M&A activity in the technology sector in the Mergers & Acquisitions article, “Tech M&A’s Uneven Comeback: Winners and Losers are Segment-Specific.”

Cain noted the positive upswing in cybersecurity deals, explaining that the bright spots in tech M&A are closely correlated with corporate budgets.

“It’s pretty clear that Corporate America has, in the last couple quarters, reopened their pocketbooks and are spending more again on cybersecurity applications,” he said.

As corporate spending on cybersecurity boosts valuations in the space and makes these companies more attractive for buyouts, Cain said this dovetails with the pressure venture capital firms are facing to return capital to limited partners.

“Whether it’s at an optimal exit or sub-optimal exit, VC firms need to have that release valve. And as the public markets continue to be unavailable for most of these companies, M&A is really the only logical way to have that liquidity event, even if it’s at a suboptimal exit point.”