Meanwhile all this consolidation is due to: (a) money is cheap and easy to get; and (b) organic growth to keep Wall Street happy is just not possible. Look at some of these deals:
- Charter buys TWC and Bright House, an $88.4 Bn deal now.
- Comcast is buying Dreamworks for $3.8B
- Gannett Offers $815 Million for Tribune Publishing
In Healthcare, it is constant M and A:
Abbott to Acquire St. Jude Medical for $25 Billion. This after Abbott is in process of acquiring another company for $6B. Sanofi Offers to Buy Drug Maker Medivation for $9.3 Billion. AbbVie to Buy Cancer Treatment Start-Up for $5.8 Billion.
I was in this industry for a few short years (10). Healthcare gave up on R&D. Less risky to buy a company than to do research. Most Big Pharma pipelines for new drugs do not contain any blockbusters. It costs from $500M to $1B to bring a drug to market. Big risk. Better to buy. Better to invest in startups, and buy them if it works out.
What a crazy world we live in.
BY Simon Rothman
"Both founders and investors value traction. Everyone wants to see strong customer acquisition, transaction volume, and geographic expansion. Growth can be a positive signal of a business’ long term potential, which is why growth is a priority for every startup. Unfortunately, growth has become a proxy for success — even if it’s “bad” growth. And yes, there is “bad” growth. If the cost of customer acquisition (CAC) is greater than the lifetime value (LTV), a startup can grow itself to death."
Sometimes Wall Street uses the wrong metrics.