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M&A, IPOs, and Startups: 2019 Recap and 2020 Projections

    
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A few months ago, we took a look at the M&A highlights from the first half of 2019. Now that the year is drawing to a close, it’s time to see what the second half of 2019 has brought while casting an eye toward the future. In this article, we’ll take a look at M&A activity, IPOs, and startups, wrapping up 2019 and making predictions for 2020.

2020 M&A: Uncertainty and Volatility Ahead

In an M&A activity article from August, we reported that the first half of the year had seen a decline in M&A activity. This trend continued in Q3 2019: global M&A plunged by 16 percent year over year to $729 billion, the lowest level since 2016. The U.S. was particularly hard-hit, with a Q3 2019 decrease of 40 percent year over year to $246 billion.

When it comes to 2020 M&A predictions, however, only one thing is certain: no one can really say for sure what’s going to happen.

The multinational law firm Baker McKenzie, for example, predicts that “global deal-making will experience a continued hangover in 2020” due to “ongoing worldwide economic uncertainty and the risk of global recession.” However, the prediction also forecasts that M&A in North America will be an exception to this trend. The firm’s annual report estimates a substantial decline in 2020 M&A activity, from $2.8 trillion in 2019 to $2.1 trillion in 2020.

On the other hand, professional services firm Ernst & Young couldn’t disagree more about M&A activity. Steve Krouskos, EY global vice chair for transaction advisory services, says that “global M&A is expected to remain healthy into 2020.” Despite fears about a global economic slowdown, he writes, “companies are clearly looking to M&A to navigate current and potential barriers to growth.” According to Ernst & Young’s Global Capital Confidence Barometer, 52 percent of companies are planning M&A activity in the upcoming year.

2020 IPOs: The Biggest Year Ever?

2019 was a big year for IPOs: companies such as Pinterest, Slack, Avantor, and Beyond Meat all went public this year. However, there were also a few major disappointments, such as when the shared workspace company WeWork cancelled its plans for a 2019 IPO. In addition, the stocks of ride-hailing companies Uber and Lyft have continued to sink ever since their hotly anticipated IPOs earlier this year.

Still, the overall picture for 2019 IPOs was a positive one: as of September, U.S. IPOs in 2019 had raised more than $50 billion, already beating the combined total for all of 2018.

While the landscape of M&A activity in 2020 is so far unclear, 2020 IPO predictions are much more rosy. The online lodging marketplace Airbnb, the DevOps software company GitLab, and the oil and gas firm Neptune Energy are among those with concrete plans for a 2020 IPO.

Meanwhile, businesses such as the big data analytics firm Palantir Technologies, the Chinese ride-hailing company Didi Chuxing, the cybersecurity software firm McAfee, the mattress e-commerce company Casper, and the Indian used vehicle marketplace Droom have all been the object of speculation surrounding their 2020 IPO plans.

Some analysts are already speculating that 2020 will be the “biggest year yet” for IPOs—but watch this space, since plans could change at any moment.

2020 Startups: A Promising Outlook

A healthy startup economy is essential for the health of the economy as a whole. Startups help introduce new ideas, create jobs, and disrupt stagnant markets.

In 2019, 60 percent of U.S. startup founders predicted that the upcoming year would be better than the previous one, with just 9 percent saying it would be worse. What’s more, 82 percent said that they planned to increase the size of their workforce in 2019.

For 2020, a growing number of entrepreneurs and investors are looking outside the traditional epicenters of startup activity. Cities such as Los Angeles, Chicago, and Pittsburgh, as well as a variety of smaller cities, are emerging as tech hubs to counterbalance and compete with Silicon Valley, New York City, and Boston.

Just a few startups to watch in 2020 include:

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