Google Antitrust Ruling: Impact on Tech M&A and Valuations with 1789 Capital

Google Antitrust Ruling Analysis

• ⚖️ A recent ruling allows Google's parent company, Alphabet, to keep its Chrome browser but prohibits exclusive search deals.
• 🎯 This decision is viewed as a significant win for Alphabet in a case originally filed by the DOJ in 2020.

Impact on Tech M&A and Market Growth

• 🚀 Deregulation is expected to be a catalyst for the broader tech market, particularly for tech M&A, with potential volume increases of 40% this year.
• 💡 This ruling suggests that many private market companies may be acquired through M&A rather than pursuing IPO exits.
• 📈 Deregulation is anticipated to drive both economic growth and EPS growth across the S&P and NASDAQ.

Valuations and Capital Formation

• 💰 The current market has suffered from a lack of DPI (Distributions to Paid-In Capital) over the past decade, making increased M&A activity a positive for valuations and exits.
• 🚀 The reopening of the IPO market, alongside M&A, is seen as a significant catalyst for the equity market and capital formation.
• 📈 There's a notable delta between IPO pricing and secondary market performance, with recent IPOs like Circle, Figma, and Bullish trading up significantly post-listing.
• 🚀 Publicly traded high-growth software companies are growing at best around 30%, while private companies in 1789 Capital's portfolio are growing at 50-100% at scale, explaining the rich trading multiples post-IPO.

Founder Conversations and Future Options

• 🤝 Founders are likely to face increased board pressure to explore monetization methods, including IPOs and M&A, options that have been limited over the last four years.
• 🔓 The ruling opens up a wider menu of options for founders, who were previously forced to finance themselves in the private market and stay private longer.