The market downturn might actually be a good thing for deal-making in crypto, according to Galaxy Digital’s top advisory executive.
“Overall, there is a lot more receptivity to the idea of M&A in this market environment,” Galaxy’s head of investment banking Michael Ashe said in an email to The Block.
That’s striking considering market down turns typically result in a pull back in M&A and initial public offerings. In Ashe’s view, the down turn has forced certain participants to more seriously consider being acquired relative to last year when crypto prices were surging and valuations for private crypto firms were frothy.
“The effective closing of the capital markets has forced companies to reassess their strategic goals,” Ashe — previously a director at Oppenheimer & Co. — added. “As part of that, many are contemplating acquisitions and even moving forward with M&A in situations where they haven’t contemplated selling. This is a big change from last year’s environment, where companies and founders were dissuaded from M&A because there was effectively a control discount, meaning companies could raise money at valuations greater than what they could sell their businesses for.”
Indeed, a plunge in prices precipitated significant liquidity issues for some firms, from lenders like Celsius and Voyager to funds like Three Arrows Capital.
It’s expecting distressed M&A to be prevalent in the upcoming quarter due to the market events seen in Q2.