As new information becomes available this article will be updated with additional companies and analysis.
Corporate acquisitions are a common business strategy used by organizations to expand their operations, enter new markets, or acquire new technologies. This article reviews the motivations behind acquisitions, past history of acquisitions in the space economy, and forecasts of potential future acquisitions.
This article focuses on Space Startups and their potential to be acquired. Public and private Space Startups are considered.
A Space Company is a business that provides space products or services. A Space Startup 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
- Financial motive
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.
Space Startup Acquisitions Trends
This analysis is a based upon a data set published by Space Fund, which compiles information on space startup exits between 2000 and December 15, 2020.
Top insights from Space Fund’s data set include:
- 55% of startups were based in the United States
- 86% of exits were via merger and acquisition
- The number of exits per year have steadily increased starting in 2013
- 2019 was the first year of billion dollar valuations
SOURCE DATA SPREADSHEET (click to view)
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
- Board of directors and/or advisers
- Satisfies one or more acquisition motives as described above
The following table tracks Space Startups 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.