Blockchain and Crypto M&A — Forming TNC’s Legacy
Blockchain and crypto M&A deals are on the rise and TNC Group will leverage this informing the company’s legacy to greatness.
As new technologies emerge, the mergers and acquisitions (M&A) process which pertains to business accumulation and economic growth becomes cost-effective and easier to pull off than the conventional methods. According to Circle, blockchain-focused M&As are projected to grow to over 300% in the upcoming years.
In 2019, 79% of companies expect a further increase in the average number and volume of M&A transactions. Technology has prompted a tidal wave of disruptions affecting various sectors and M&A is among the good strategies for companies to stay one step ahead of the competition. TNC aims to unite the cryptocurrency world and through blockchain technology, this could become possible. By reviewing various token and companies listed under CoinMarketCap, those which are under-funded yet have real potential will be merged and acquired by TNC.
The ongoing spike on M&A activities signals a greater possibility for blockchain integration and what was initially deemed as market consolidation could also become the next step in strengthening the key players within finance, tech, innovation, and more industries.
Key Aspects of M&A
The term M&A denotes the process of one company combining with another. Under the M&A umbrella falls a list of transactions including mergers, wherein one company will take over another company; acquisitions, wherein the acquiring company will obtain the majority of the stake of another firm, not changing its name or altering its legal structure; and consolidation, wherein both stockholders of the companies will approve and create a new company.
The main reasons why M&A is being conducted can be summarized in two words: synergy and growth. The most associated word for M&A is synergy, which in this context means that the performance will improve as the costs will lessen. Typically, a business will attempt to merge with another business that can complement its strengths and mitigate its weaknesses. Also, M&A can give a company an opportunity to expand and grow further without doing solely the work themselves.
The M&A proceedings is divided into a preparation phase and an implementation phase. The preparation phase involves defining the objectives and strategies of the target project, as well as the research and market analysis to identify potential collaborators. Alongside this phase, one of the first stages of M&A is done — due diligence. This signifies a complete review of documents to evaluate legal, financial, and technical risks by a potential buyer or its agents before purchasing an asset or a company.
During the implementation phase, potential deal partners are approached and once both parties have come into a settlement, a non-disclosure agreement (NDA) could be signed. After this, a few more meetings and discussions will occur until the acquisition process will be completed.
The M&A process usually consists of a comprehensive team in which companies rely on corporate experts such as lawyers, external M&A advisors, auditors, and tax consultants. Typically, the manual process results in both high costs and considerable time expenditure. The lengthy and cost-intensive process, as well as the uncertainty of return of investments (ROI), makes companies skeptical of M&A.
Blockchain is a new database technology that promises unprecedented efficiency and seems propelled to make M&A negotiations and due diligence faster, more accurate, and cheaper. The impact of these benefits makes a spur for a major interest in the M&A space.
Blockchain Advantage
While blockchain technology is still progressing, its disruptive effects can impact so many industries by creating more efficient systems. As companies and individuals study the effects and uses, blockchain will become more substantial to technology-based M&A deals.
Conventionally, M&A was achieved by establishing a supervised, physical data room in secured premises with controlled access. The weaknesses of data rooms are that they are time-consuming, error-prone, and outdated. With blockchain, data rooms can be phased out as data can be stored and secured through a digital ledger. Benefits such as integrity and transparency; efficacy and interoperability; flexibility and privacy; and cybersecurity can be contributed to the M&A sector.
“The attributes of blockchain technology are ideally suited to large networks of disparate partners.”
Marc O’Brien, How Blockchain will Drive Future M&A Activity
According to JMP Securities, an investment banking and asset management firm, M&A is becoming more favored than starting up new companies or divisions from scratch. In 2018, 54 M&A deals involving blockchain and cryptocurrency-related ventures were done and by this year, that number shot up to 115. JMP’s Head of Blockchain and Digital Assets Investment Banking Satya Bajpai describes the current strategy adopted by most investors as a “land grab” approach, where they are driven to buy rather than build. He says that companies tend to do this as the “acquired entity already has some technology and, often, market-ready products.”
Bajpai added that users — an essential part of any startup’s assets — are on-boarded through an acquisition, as well as the working teams of that company who already have a business and technical backgrounds. This makes M&A seem like a shortcut to the tedious hiring process and user base expansion.
Crypto M&A Deals
As the cumulative market capitalization for cryptocurrencies dropped from an all-time high of $813 billion in 2018 to just $270 billion at present, the industry is finding ways to survive for a longer run. According to data provided from Pitchbook, a financial database for investors, $559 million worth of cryptocurrency-related M&A deals took place in the United States in 2018.
During the first half of 2019, there were some interesting developments regarding consolidation in the crypto space. These include the social media giant Facebook acquisition of Chainspace, a blockchain startup founded by researchers at University College of London; Kraken has undertaken UK-based Crypto Facilities for an amount of $100 million; and EZAdvance absorbed the Indian digital payments startup Alconomy to expand into digital banking.
Currently, due diligence is one of the more expensive and time-consuming phases of an M&A deal. But by shifting due diligence documentation to blockchain, financial and legal advisors wouldn’t have to spend as much time poring over records. JMP also estimated a total of 145 deals will take place before the year is up. As M&A activities take place across borders, it generates an average size of $100 million. Taking this into consideration, TNC aims to go bigger as it strives its way into uniting the cryptocurrency world.
TNC’s Vision of Unification
With its successful launching event in New York, TNC is kicking off its plans for a stronger and more innovative future. Now under the preparation phase of its M&A strategy, TNC is reviewing 1,700 coin and token companies ranked on the CoinMarketCap website. With a lot of industry experts and globally-recognized executives on its side, TNC advisors are scrutinizing the projects with the most potential to succeed.
There are possible viewpoints they might consider during their appraisals: a company has value but its tokens are insignificant; the company and tokens both seem valuable, or the company does not have much value but the tokens can be functional. Upon careful consideration, 500 companies will be chosen to be absorbed into TNC’s supercompany.
Aside from M&A, the company aims to incorporate TNC’s token development, blockchain total solutions offering, and establishment of its own blockchain academy. More developments will be announced later as TNC IT Solutions Group continues to spread its influence to various sectors of the world and revolutionize the cryptocurrency world into one.
Do not miss any of the announcements from TNC’s team.
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