July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Verizon no longer wants its wireless destiny tied to the European carrier Vodafone.

Verizon is reportedly working to take full ownership over Verizon Wireless, its joint venture with Vodafone, reports Bloomberg. Among the potential options, Verizon is apparently considering a buyout of Vodafone’s 45 percent stake (worth around $115 billion, according to analyst estimates) or a massive merger.

Judging from what Bloomberg is hearing, it doesn’t sound like the merger is very likely. Two sources say the companies discussed a potential union in December, but they ended up disagreeing on headquarters location and leadership structure. A merger would also be one of the biggest corporate takeovers ever, considering Verizon’s $130 billion market cap and Vodafone’s $120 billion.

In the end, it’s much simpler for Verizon to pay.

And with Verizon Wireless being its most profitable division, it makes sense for Verizon to want full control. It could lead to more creative subscription plans, new types of advertising, or perhaps even business ideas we haven’t even considered.

At its CES booth in January, Verizon focused heavily on the many ways it could use its wireless network outside of phones. For example, it could power video headsets for firefighters, which would help them to pull up building schematics on the fly, or it could connect solar recycling bin to alert operators when it’s full.

Vodafone’s chief executive Vittorio Colao has also been actively trying to sell off its stakes in joint operations, Bloomberg points out, so he would likely welcome Verizon’s buyout offer.

Verizon hasn’t been shy about wanting to take over its wireless division over the past few years. Verizon Wireless was born from a joint venture between Bell Atlantic (which would later become Verizon) and Vodafone in 1999. Given just how much the mobile landscape has changed since then, it simply makes sense for Verizon to want to break things off.

Photo: Eric Hauser /Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Clearwire’s fate is beginning to resemble a daytime soap opera.

The troubled company has grabbed $80 million in financing from Sprint –  its longtime partner and majority stakeholder — potentially killing Dish’s buyout offer, reports Reuters.

Sprint offered to buy out Clearwire for $2.2 billion back in December, but Dish shot back with its own $5.5 billion offer earlier this year. Clearwire shareholders weren’t pleased with Sprint’s low offer, and it seemed like they were leaning toward accepting Dish’s — until today.

As part of its deal, Sprint offered Clearwire $800 million to stay afloat until everything was finalized. But Clearwire said it wouldn’t use any of Sprint’s financing as long as it was still considering Dish’s offer. By accepting Sprint’s $80 million, it seems like Clearwire has made up its mind to forgo Dish’s higher offer. Clearwire isn’t commenting on the status of its negotiations yet.

Why the battle for a failed wireless provider? As with most issues in the wireless world, it’s all about spectrum. Sprint desperately needs more spectrum to build out its LTE network in the U.S., and Dish is also gearing up to provide its own LTE service according to a recent regulatory filing.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Battery Ventures has filled its latest investment treasure chest with $900 million.

The venture capital firm announced today the closure of its tenth fund, which actually includes two funds that will be co-invested. Battery Ventures X (BVX) is a $650 million fund that will back companies at all stages of their lifecycle. The Battery Ventures X Side Fund will dedicate $250 million to companies further down the pipeline and support acquisitions, “providing the flexibility to support larger growth and buyout situations without disrupting the concentration in BV X,” the firm said in a statement.

Most of the resources will go into the North American, Israeli, and European markets. Battery Ventures will focus on companies working with software-as-a-service for the enterprise and big data analytics; IT infrastructure like networking and storage; technology-enabled business services; and buyouts in markets that are “ripe for consolidation.”

Since its formation in 1983, Battery Ventures has raised more than $4.5 billion and invested in more than 300 companies. In 2012, four of the firm’s portfolio companies went public — Bazaarvoice, ExactTarget, Guidewire, and Splunk — and nine portfolio companies were acquired. On Monday, financial analysis firm PrivCo released a report of the top 20 technology venture capital firms of 2012, ranking Battery Ventures at number six.

Battery Ventures has offices in Boston, Silicon Valley, and Israel.

Photo credit: eszter/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Google is the latest company to be connected to a potential buyout of troubled Yahoo Inc. The search giant has talked to at least two equity firms about helping it acquire a chunk of Yahoo, according to a report in the Wall Street Journal, which sites an unnamed source close to the matter.

The talks are said to still be in the early stages, and no serious offers have been made, but the play would be for Yahoo’s “core business.” The Wall Street Journal’s source said that a formal proposal hasn’t been assembled, and it’s possible Google could end up not even perusing a bid.

Any deal between the two companies would undoubtedly draw the attention of antitrust regulators, and Google is already in the hot-seat. In September, Google Chairman Eric Schmidt testified at a Senate Judiciary antitrust hearing. The committee is concerned that Google’s dominance of the search market gives it an unfair advantage when promoting its own businesses.

Google is just the latest big name to be tied to a possible Yahoo acquisition. Rumors of Yahoo putting itself up for sale have been circulating wildly since it fired Chief Executive Officer Carol Bartz in September. Microsoft, Aol and Chinese company Alibaba have all expressed interest in buying all or part of the company. Yahoo co-founder and former CEO Jerry Yang considered making a deal with private equity firms to buy up the company and take it private.

The struggling company is currently being led by interim CEO Tim Morse.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Jeff Bussgang is a General Partner at Flybridge Capital Partners. This column originally appeared on his blog Seeing Both Sides.)

In undiluted tellings of the tale, the Big Bad Wolf devours Little Red Riding Hood before running off into the woods. That’s something worth remembering when considering the prospects for a wave of technology M&A that’s about to materialize.

Over the last few months, investment bankers have been eagerly reaching out to corporate buyers at the large public technology companies, as their burgeoning balance sheets have grown large enough to cause even a sangfroid, buttoned-down banker to salivate.

The eight US-based technology companies with market capitalizations of over $100 billion (Apple, Microsoft, Google, IBM, Oracle, Cisco, Intel and HP) are sitting on over $200 billion in cash and short-term investments. Throw in the top three healthcare firms by market capitalization (J&J, Pfizer and Amgen) and the figure is $250 billion.

Further, each of these companies is in a strong competitive position, competing in markets with positive secular trends thanks to the burst of innovation that is ahead of us. (I can’t cite another time in the brief 50 years history of the technology industry when so many US-based companies were in such strong global leadership positions in so many compelling, growing markets.)

With the economy modestly rebounding and fear beginning to seep out of the market – the VIX index, a measurement of market volatility or fear, is down to as low as it was in summer of 2008 – it’s no wonder that many are forecasting a robust pick- up in M&A activity in the coming year.

Private investors have held on to their good companies over the last two years when it was purely a buyer’s market. Meanwhile, large companies who have spent the last two years cutting costs and pushing for efficiencies are now eyeing growth. And what’s the quickest way to grow? Buy it.

That said, private companies should be careful not to get too euphoric. A quick survey of my investment banker friends yields comments like, “a flight to quality” (in other words, rational deals with market leaders get done, but unloading mediocre companies is not in the cards), “patience” and “inconsistent interest.”

One banker reported to me that one or two buyers are at the table on deals that are getting done, not three or four. Further, no one appears to be in a rush. Strategic fit is being carefully analyzed and only top priority opportunities are being pursued.

So despite the fact that yields on cash are at a historic low, don’t expect those balance sheets to thin out anytime soon. And Little Red Riding Hood should still be very, very afraid.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Megan Jones is a Director at Hadley Partners. A modified version of this story appeared on the company’s blog.)

For any industry in which scale is important – especially ones like media or consumer technology – consolidation concerns should be top of mind. Winning over a customer that’s dominated by a better-funded and more established company can be a losing proposition.

That’s why it’s often smart to seize an advantage early on once the winds of M&A begin blowing.

As a tech banker in Menlo Park, I saw a lot of consolidations early in my career. Recently, in discussions with a number of companies, I’ve heard potential acquirers are beginning to lurk nearby once more – even around businesses that have no interest in selling.

These companies are in industries that some people might think were still in the thick of a growth phase, which raises the question: Why do emerging industries sometimes evolve quickly into consolidating ones? I’ve got a few ideas…

1. Emerging industries that get press and attention tend to those that grow quickly. They also have large markets, attract talented people, have multiple and iterative stages of evolution and scale. All of those factors enable easier funding – either from business partners or venture capitalists.

2. Sometimes, as a result, those industries get over funded – with multiple VC firms each owning a similar company. All of those heavily funded companies then slug it out in a battle royale to win market share.

3. New industries or business segments are hard to build. Business models are often based on precedent – industries that targeted similar customers and monetized in related ways. In other words, you guess a lot, hopefully making reasoned guesses. A lot of mistakes are made (and some companies blow up) as a workable business model develops through trial and error. (Google, for example, wasn’t the first search engine.)

4. To build market share faster, some companies wisely merge. This action can enable economies of scale, a better customer experience (more offerings; better geographical reach; better or deeper management team) and add audience/customers. If the market conditions are right, the merger could create an entity that’s large enough to go public; thereby becoming better funded than its competitors.

5. The market can only support so many like companies – and other competitors in the sector realize it’s better to sell what’s left of a beaten company – and sieze some value from what you’ve built, rather than none.

6. Buying something (capacity; products; customers; geographies) takes less time and money than developing it. This factor can also lead to larger public companies buying into a new and emerging sector.

7. Selling late in the consolidation stage is often not as lucrative as selling early. The first companies to be acquired typically get more resources to build their presence in the industry, giving them an advantage (and making it more challenging for those that remain independent). The holdouts need to execute flawlessly in order to maintain any early leadership position they have.

8. VCs may push for a sale to ensure that their portfolio company partners with other stronger sector players, ensuring they get a good return.