Squawk Pod M&A Deals Halted, 2025 Deals Still On, & Gauging the Tariff Pinch 12/11/24
Dec 11, 2024
Mitchell Green, founding partner at Lead Edge Capital, shares insights on halted M&A deals, including significant grocery and steel mergers. He discusses why 2025 will still see public market deal-making despite a slow IPO year, as many top companies have already secured funding. The conversation also touches on the impact of President-elect Trump's tariff strategies on the supply chain, raising concerns about consumer prices and international trade challenges. Gene Seroka adds depth by exploring automation in port operations and its effects on communities.
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Private Funding Reduces IPOs
- Many top-tier companies raised substantial capital in 2020 and 2021, essentially completing IPOs privately.
- This influx of private funding reduces the need for traditional IPOs in the near future.
Rule of 40 and Unicorn Valuations
- The "Rule of 40" assesses business health by adding revenue growth rate and EBITDA margin.
- Many unicorn companies fall into the low "Rule of 40" range, hindering their public market appeal.
Zombie Unicorns and IPO Challenges
- Companies with high cash reserves and low growth often delay exits, hoping for improvement.
- This reluctance to sell creates a challenge for attracting large institutional investors in IPOs.