The Year of the Deal

Could 2012 be the year of merger mania for startups? Shareholder Representative Services thinks so.

Image: iStockphoto

Startups that have weathered the downturn and proved their worth, venture capitalists looking to cash out, and corporations sitting on piles of cash amount to a promising year for mergers and acquisitions.

“Our belief is that the M&A market will grow substantially,” Mark Vogel, cofounder and managing director at Shareholder Representative Services, told Portfolio.com. His company helps manage merger deals after closing and has ramped up to meet what it expects will be increased demand in 2012.

SRS, based in the San Francisco area, has opened offices in Boston, Tel Aviv, and Austin, Texas, and invested in technology to deal with the expected uptick. Vogel said his firm had invested “millions” to get ready for an onslaught of mergers.

Vogel said startups could also be reaching the point where they can be sold more quickly than in the past. Especially in the tech field, the cost of bringing a product to market has dropped, allowing companies to grow up faster.

Most of the companies Vogel expects to be acquisition targets will be more mature startups that have already proved their business models and their ability to not just bring in revenue but to achieve profitability.

Some companies, he said, could have been ready for the sales block a couple of years ago, but have had to grow up on their own because of economic uncertainty.

“This delay has not only allowed these companies to prove that someone will buy their product, but that…the business model has proven out,” Vogel said.