Silicon Valley venture capitalists–who invest in startups with the aim of profiting later when those companies go public or are sold–have found it tough to produce returns recently.
Here is a good rule of thumb in M&A: Be careful what you say in public.
The joint venture Nokia Siemens appears to be learning this lesson the hard way this week, after its North American Operations president, Sue Spradley, was quoted as saying it would be interested in buying “other” assets of Toronto telecommunications-gear maker Nortel Networks, which filed for bankruptcy-law protection in January.
Startup executives and employees haven’t had it easy cashing out of their private company stock since the IPO and M&A markets, which typically provide “liquidity” and a route to riches, have been relatively moribund in recent years. Spotting an opportunity, several companies have sprung up in recent months to try and provide startups with new avenues to liquidity.
Until three weeks ago, few people outside corporate data centers knew much about deduplication technology, which makes data storage more efficient by culling repetitive documents. That changed when data storage companies NetApp and EMC got into a bidding war last month for a leading provider of the heretofore obscure software.
The number of tech mergers and acquisitions fell precipitously in the fourth quarter of 2008, giving rise to fears that the market for software companies would dry up in 2009. But one investment bank says those worries are unfounded.
The first high-profile tech acquisition in months took place Thursday, but don’t take that as a harbinger of more deals.
Autonomy, a U.K. company that makes software that businesses use to track corporate information, acquired Interwoven, a San Jose, Calif., document-management company, for $775 million in cash. Autonomy will sell some stock and tap a new line of credit in order to finance the deal.
Now that Microsoft has withdrawn its unsolicited buyout bid, Yahoo investors who are outraged and seeking to extract some pain may gear up to engage in several actions, ranging from gunning for a board seat to voting “against” re-electing the company’s slate, say proxy solicitors and M&A attorneys.
Eric Jackson, a Yahoo shareholder activist, falls into both camps. On Sunday, Jackson said he’s planning to launch a “withhold vote” campaign and hopes to run for a board seat when Yahoo holds its next annual shareholders meeting.
“I’m definitely interested in throwing my hat in the ring, if it’s allowable, and plan to talk to other shareholders,” said Jackson, founder of hedge fund Ironfire Capital. “And whether it’s me or other people who get elected, that’s fine. Yahoo’s current board definitely needs new blood.”
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