Between 2000 and 2020, 83% of Space Start-up exits were via merger and acquisition.
New Space Economy analysis
This article focuses on Space Start-ups and their potential to be acquired. Public and private Space Start-ups are considered. As new information becomes available this article will be updated with additional companies and analysis.
A Space Company is a business that provides space products or services. A Space Start-up is considered to be any Space Company which received and announced seed or venture capital from 2000 on.
WHY COMPANIES MAKE ACQUISITIONS (click to expand)
Companies make acquisitions for a variety of reasons; the top 10 motivations according to dealroom.net are:
- Economies of scale
- Market share
- Acquire new technologies/expertise
- Synergies (“Value Creation”)
- Geographical diversification
- Vertical integration
- Cross-selling
- Taxation
- Financial motive
- Opportunism
Motive 1: Economies of Scale
Bigger is often better. Larger companies enjoy cost savings and competitive advantages that smaller companies usually don’t.
Motive 2: Market Share
Market share may be the most common motive of all for M&A transactions; companies are constantly looking at where they stand in their industries relative to their peers.
Motive 3: Acquire New Technology/Expertise
Industries change and if companies don’t, they don’t survive. That’s why companies are often on the lookout to acquire other companies which give them new technologies and expertise.
Motive 4: Synergies (“Value Creation”)
If the targeted company has complementary capabilities to the acquirer, then the opportunity for value creation exists.
Motive 5: Geographical Diversification
Acquiring a cash generating entity in a foreign country can provide a platform for a company’s growth in the country.
Motive 6: Vertical Integration
Vertical integration involves a company acquiring different parts of the value chain.
Motive 7: Cross-selling
Cross selling can be a powerful way to deliver revenue synergies: The idea is that two companies have more to offer their customers by being together.
Motive 8: Taxation
M&A to avoid taxes. The idea is that a cash flow positive company acquires a firm with carry forward tax losses to reduce its own tax burden.
Motive 9: Financial Motive
A company is being bought essentially for its stream of cash flows.
Motive 10: Opportunism
An opportunistic deal is buying a company below its intrinsic value.
Forecasts
The following companies are currently forecast to be acquired 2023+: Terran Orbital by Lockheed Martin; and Firefly Aerospace by Northrop Grumman.
Information used to identify potential acquirers/acquirees includes:
- Strategic partnership/dependency
- Sales agreements, e.g. reseller, distribution, co-selling
- Investors
- Board of directors and/or advisers
- Satisfies one or more acquisition motives as described above
The following table tracks Space Start-ups and identifies potential general acquirers. Where appropriate specific acquirer companies and associated indicators are noted. Note that you may need to swipe left to see the full spreadsheet.
Information sources include: company press releases, annual reports, investor materials, website, and SEC filings; Spaced Ventures; and news articles.
Insights and suggestions are welcome, please use this webpage for submission.
