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Software-as-a-service (SaaS) platform <keyword id="1132603" type="General" weightage="100" keywordseo="zendesk" source="Orion">Zendesk</keyword> has announced to lay off 8 per cent of its workforce, about 320 employees, as macroeconomic conditions have not improved and "we find ourselves in an increasingly competitive marketplace". According to Zendesk CEO <keyword id="17387230" type="General" weightage="50" keywordseo="tom-eggemeier" source="Orion">Tom Eggemeier</keyword>, from 2020-2022, the hiring outpaced business realities. "At the same time, our customers are navigating massive shifts in how they do business, including increased pressure to deliver profitable growth and leveraging fast-advancing technology like generative AI," he told employees in an email. To best serve customers, "we have to sharpen our focus and wherever possible, direct our talent and resources to our highest priorities including maturing how we go to market and building new products and capabilities that deliver tremendous value," he added. Each impacted employee will be eligible for three months of base salary/on-target earnings plus one week for each full year of service, job search resources, a prorated portion of annual bonus payable at target, 60 days of vesting cash and health insurance benefit coverage. "In some countries, this process, including notifications about potential role impact, will take longer due to local requirements and practices," informed the CEO. "For those not impacted, we know this is a difficult time for you too, as we all say goodbye to teammates. In the coming days, your E-staff and team leaders will hold meetings to talk more about what this means for your organisation and team," <keyword id="17578777" type="General" weightage="50" keywordseo="eggemeier" source="Orion">Eggemeier</keyword> added. In June last year, Zendesk was acquired by a group led by global investment firms <keyword id="14288991" type="General" weightage="20" keywordseo="permira-and-hellman-friedman" source="Orion">Permira and Hellman &amp; Friedman</keyword> in a $10.2 billion all-cash deal. Zendesk started the customer experience revolution in 2007 by enabling any business around the world to take their customer service online. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/markets/news/kotak-report-sounds-a-warning-for-the-nonchalant-indian-market-investor/articleshow/100670605.cms">Kotak report sounds a warning for the ‘nonchalant’ Indian market investor</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/how-india-has-transformed-in-the-last-10-years-according-to-morgan-stanley/slidelist/100671078.cms">India’s top 10 transformation moves in the last decade according to Morgan Stanley</a>

Zendesk lays off 320 employees; 8% of workforce

<ul class="summary-list"><li>Insider's Banker of the Week series appears in our weekday newsletter, <a href="https://www.businessinsider.com/subscription/newsletter/10-things-on-wall-street">10 Things on Wall Street</a>.</li><li>This week we're highlighting Jenny Lee, who just left her position as a managing director on JPMorgan's leveraged-finance desk to build a private-credit business for Brigade.</li></ul>After almost three decades with JPMorgan, Jenny Lee vacated her role as the bank's co-head of leveraged capital markets late last month. She is joining alternative investment manager Brigade Capital Management in October to build the firm's private-credit business.Lee's decision comes as the capital markets nurses its way through a slump in dealmaking left hamstrung by volatile stock markets and a slowdown in economic growth. Big banks are also <a href="https://www.businessinsider.com/private-credit-high-returns-opportunities-risk-carlyle-kkr-apollo-2021-4">losing share</a> in the leveraged-capital-markets business to private-credit funds, which have shown increased willingness to finance deals that banks typically underwrite and syndicate to investors through high-yield bonds or leveraged loans.A group of direct lenders led by Blackstone Credit, for example, will provide <a href="https://www.ft.com/content/3989312e-489b-4cb8-86bf-55b078d">more than $4 billion</a> in debt for Hellman &amp; Friedman's and Permira's $10.2 billion takeover of software firm Zendesk announced in June. In May, a club of lenders including Blackstone, Oak Hill, Crescent Capital, and Blue Owl, provided <a href="https://www.bloomberg.com/news/articles/2022-05-17/private-credit-club-snags-2-9-billion-mantech-buyout-debt?sref=ipW5reFz">almost $3 billion</a> to support Carlyle's purchase of government contractor ManTech International, and that same month, a group led by Ares Management <a href="https://www.bloomberg.com/news/articles/2022-05-03/ares-led-group-snaps-up-2-billion-chunk-of-nielsen-buyout-debt?sref=ipW5reFz">committed up to $2 billion</a> in debt to back the sale of Nielsen to Elliot and Brookfield Asset Management.For Lee, the move is something of a leap of faith. She's leaving a top-tier bank with an established leveraged-finance platform to not just build on Brigade's private-credit arm, but to help fundraise and invest, or participate, in direct loans. That's everything from a direct loan to committing to a club deal with a group of direct lenders.Led by Donald Morgan, Brigade manages more than $30 billion in assets. But it's competing in a space dominated by larger firms like Owl Rock, Blackstone, and Ares, among others.Leaving behind a gargantuan balance sheet like JPMorgan for an asset manager that's competing with some of the globe's largest investors, Lee will have her work cut out for her.But as Insider has <a href="https://www.businessinsider.com/top-leveraged-finance-bankers-from-goldman-sachs-to-kkr-2021-9">previously reported</a>, Lee's peers in leveraged finance regard her as one of the most connected bankers on the Street, who is well-placed to grow a business amid a market downturn.After years of pressure to top league tables at JPMorgan, heading to Brigade is a new challenge for Lee, and one that comes as the capital markets moves away from years of low-cost capital and record-breaking transaction volumes.Rising interest rates have increased borrowing costs, and dealmaking is made all the more difficult amid a bout of economic uncertainty.But the rise of private credit means there is an opportunity for Lee to not just leverage her Rolodex of clients, but to take share from established Wall Street banks.Bloomberg <a href="https://www.bloomberg.com/news/articles/2022-07-27/jpmorgan-leveraged-finance-veteran-jenny-lee-to-join-brigade?utm_medium=email&amp;utm_source=newsletter&amp;utm_term=220729&amp;utm_campaign=author_19463148&amp;sref=ipW5reFz">first reported</a> on Lee's departure from JPMorgan on July 27.The Banker of the Week series is featured in Insider's 10 Things on Wall Street — <a href="https://www.businessinsider.com/subscription/newsletter/10-things-on-wall-street">sign up here to get the newsletter each weekday morning.</a>

Jenny Lee left JPMorgan's table-topping leveraged-finance desk for a gig with Brigade Capital Management. The dealmaking veteran is taking the plunge into private credit as the market shifts.

You may recall the loss-making <a href="https://www.businessinsider.com/softbank-view-inc-rao-mulpuri-spac-investigation-2022-6">smart-glass manufacturer View Inc</a>. that my colleague Hayley Cuccinello and I have chirped on about for almost a year now.Well, it is still burning through cash. View incurred $21 million in R&amp;D costs in the second quarter and $41 million in expenses because of legal, consulting, and accounting expenses related to an <a href="https://www.businessinsider.com/softbank-view-inc-rao-mulpuri-spac-financing-glass-cash-burn-2021-12">audit conducted last November</a>. This was against $33 million in revenue for the first half of 2022.But importantly, View is again in need of capital. This month, the glass maker said it inked a $100 million common stock purchase agreement — think of it like a line of credit in exchange for more equity in the company — with Cantor Fitzgerald.View also said it sought up to $200 million in convertible notes. Similar to the $100 million agreement outlined above, convertible notes are like a bond that the holder can switch to equity in the company at a later date.To help dissect convertible debt, I spoke with Michael Miller, president and chief investment officer at Wellesley Asset Management, and a fan of all things convertibles.This post first appeared in 10 Things on Wall Street, a newsletter by Insider that brings you all the biggest stories dominating the finance industry — delivered daily to your inbox. Sign up <a href="https://www.businessinsider.com/subscription/newsletter/10-things-on-wall-street?r=US&amp;IR=T">here</a>. Download Insider's app <a href="https://link.insider.com/click/27645591.160803/aHR0cHM6Ly93d3cuaW5zaWRlci5jb20vYXBwP25yX2VtYWlsX3JlZmVyZXI9MSZ1dG1fc291cmNlPVNhaWx0aHJ1JnV0bV9tZWRpdW09ZW1haWwmdXRtX2NvbnRlbnQ9T3BlbmluZ19iZWxs/62667762063d6b9bef0cffb3Bf9c9aa56">here.</a><a href="https://www.businessinsider.com/softbank-view-inc-rao-mulpuri-spac-investigation-2022-6"></a>1. Startups that rode the special-purpose acquisition company wave are turning to unique forms of capital raising for cash. View and electric-truck manufacturer <a href="https://www.cnbc.com/2022/08/04/nikola-nkla-q2-2022-earnings.html">Nikola have tapped</a> into equity lines of credit, and explored convertible debt deals.Convertible debt can be crucial lifelines for companies low on cash. Investors like the upside of getting in with a company that may have little choice but to issue a convertible bond at a greater interest rate than what an investor could find elsewhere in the fixed-income markets. Yes, investors are assuming more risk, but the hope is that a former Silicon Valley darling will blossom again once the public markets heal, or the company eventually turns a profit (fingers crossed)."If I'm a CFO and I want to issue $100 million in convertible bonds, and if my company says it's going to do what it promises, then no one is going to knock on my door and ask for money back. They're going to end up converting that bond into stock," Miller told me.To be sure, issuing new stock for these convertible bond holders-cum-shareholders will dilute existing equity owners, and that doesn't always end well (<a href="https://www.businessinsider.com/how-mark-zuckerberg-booted-his-co-founder-out-of-the-company-2012-5#:~:text=On%20January%207%2C%202005%2C%20Zuckerberg,24%25%20to%20below%2010%25.">just ask Facebook</a> co-founder Eduardo Saverin). But doing it with an unprofitable company during a market rebound can be rewarding for existing equity investors who have enjoyed a bump in the share price."Yeah, I might dilute stockholders, but I'm not diluting them at $10 a share, it could be $30 or $40, and that makes the CFO look like a rockstar," according to Miller.For View, right now, that thought <a href="https://www.bloomberg.com/opinion/articles/2022-05-19/view-inc-is-this-the-spac-era-s-worst-deal">might be wishful thinking</a>. We will see. The company said it has signed a non-binding term sheet with a "prospective lead investor" for convertible debt, but it's still burning cash, and has not really moved the needle on reaching profitability.In other news:<a href="https://www.businessinsider.com/how-bcg-interview-process-works-2022-3"></a><div type="image" title="Boston Consulting Group employees" height="800" width="1066" msid="93882272" hostid="261" sizebytes="66116"></div>2. Boston Consulting Group is set to pay its recent MBA graduates up to $250,000 per year. Here are the top traits interviewers for the consulting firm <a href="https://www.businessinsider.com/how-bcg-interview-process-works-2022-3">are looking for</a>.3. More than 70 members of Congress have violated a law designed to prevent insider trading and stop conflicts of interest. Congress is now considering banning lawmakers from trading stocks. Insider and other media outlets have identified US lawmakers not complying with <a href="https://www.businessinsider.com/congress-stock-act-violations-senate-house-trading-2021-9">the federal STOCK Act</a>.4. Light Street Capital Management, an investor in software-as-a-service (Saas) firm Zendesk, plans to vote against a takeover of the company by private-equity firms Hellman &amp; Friedman and Permira. Light Street has proposed an alternative strategy that includes a $4 billion investment that would <a href="https://www.reuters.com/business/light-street-capital-vote-against-zendesk-102-billion-go-private-deal-2022-08-29/">keep Zendesk independent</a>.5. Wall Street predicted that Russia's economy would collapse after its invasion of Ukraine. Here are three charts <a href="https://markets.businessinsider.com/news/commodities/russia-outlook-charts-wall-street-investing-analysis-market-strategy-economy-2022-8">that suggest otherwise</a>.6. Tradeblock, a platform for buying and selling sneakers, announced a $9 million seed investment round. Here is how the startup raised the money by <a href="https://www.businessinsider.com/sneaker-trading-app-tradeblock-raises-nearly-9-million-seed-round-2022-8">focusing on collectors, not sellers</a>.7. The US Open in New York is luring companies to the tennis with $10,000 courtside seats and luxury perks, Bloomberg reported. The demand for high-end experiences is "astonishing," according to the US Tennis Association, which has also attracted interest from <a href="https://www.bloomberg.com/news/articles/2022-08-29/us-open-lures-companies-with-10-000-courtside-seats-luxury-perks?utm_medium=email&amp;utm_source=newsletter&amp;utm_term=220829&amp;utm_campaign=author_19463148">the crypto industry</a>.8. Kewsong Lee's abrupt departure as Carlyle's chief executive followed conflicts over how to run the private-equity firm, according to the New York Times. The investment firm's founders balked at his salary requests, and Lee clashed with them over how to run <a href="https://www.nytimes.com/2022/08/29/business/carlyle-group-kewsong-lee.html">the investment firm</a>.9. NDVR, a quant-investing startup that aims to "fix wealth management," just raised $20 million in Series B capital. Here is the 10-page pitch deck NDVR used to convince investors <a href="https://www.businessinsider.com/ndvr-pitch-deck-quant-investing-seriesb-funding-aqr-2022-8">to write it a check</a>.10. Venture capitalists have a laundry list of books for personal growth, professional development, and just plain old fun. Insider asked VCs from firms like Index Ventures and Initialized Capital for their summer reading choices, and some included bestsellers like "Where the Crawdads Sing," and the <a href="https://www.businessinsider.com/vc-share-summer-book-recommendations-personal-professional-development-2022-8">Nike founder's memoir "Shoe Dog."</a>Done deal: <ul><li>Sony said it <a href="https://www.reuters.com/technology/sony-buy-mobile-game-developer-push-beyond-consoles-2022-08-29/">will acquire</a> Helsinki and Berlin-based mobile-gaming business Savage Gaming Studios as part of a push beyond console gaming. Savage will become part of a new mobile division of PlayStation Studios, Sony said.</li></ul>Curated by Aaron Weinman in New York. Tips? Email <a href="mailto:aweinman@insider.com">aweinman@insider.com</a> or tweet <a href="https://twitter.com/aaronw11">@aaronw11</a>. Edited by Hallam Bullock (tweet <a href="https://twitter.com/hallam_bullock">@hallam_bullock</a>) in London.

Startups that rode the SPAC wave are turning to a new tactic for funding lifelines. Here's what you want to know.

Hi, Aaron Weinman here. The US Supreme Court voted to strike down Roe v. Wade on Friday, leaving the legal fate of abortion up to individual states.Let's understand how Wall Street firms are responding. Some are touting pro-choice business decisions, while also expanding in the very states that have waited years for SCOTUS to overturn the divisive ruling.If this was forwarded to you,<a href="https://www.businessinsider.com/subscription/newsletter/10-things-on-wall-street"> sign up here</a>. Download Insider's app <a href="https://www.insider.com/app">here</a>.<a href="https://www.businessinsider.com/goldman-sachs-bank-of-america-jp-morgan-roe-v-wade-2022-6"></a>1. SCOTUS struck down Roe v. Wade on Friday. The decision — which had been largely expected since an <a href="https://www.politico.com/news/2022/05/02/read-justice-alito-initial-abortion-opinion-overturn-roe-v-wade-pdf-00029504">initial draft opinion</a> was published by Politico in May — comes as Wall Street juggles the implementation of policies to support staff who seek abortions, without running afoul of pro-life clients and states where some firms are <a href="https://www.businessinsider.com/banks-hedge-funds-investment-firms-grow-tech-talent-hiring-texas-2022-4">expanding their presence</a>.Bank of America, Goldman Sachs, and JPMorgan all agreed on Friday to cover travel costs for staff seeking abortions. Goldman's decision, outlined <a href="https://www.businessinsider.com/goldman-sachs-to-cover-abortion-costs-for-women-to-travel-out-of-state-2022-6">in this memo,</a> was first reported by Insider. JPMorgan said it would <a href="https://www.cnbc.com/2022/06/24/jpmorgan-tells-employees-the-bank-will-pay-for-travel-to-states-that-allow-abortion.html">cover travel expenses</a> for abortion-seeking staff from July.Citi was <a href="https://www.reuters.com/world/us/citigroup-cover-travel-expenses-abortions-us-states-curb-access-2022-03-16/">the first major US bank</a> to make that commitment after new restrictions were put on abortions in states like Texas in March. In an era of <a href="https://www.businessinsider.com/jpmorgan-ceo-jamie-dimon-not-woke-2022-6">stakeholder capitalism</a>, these firms walk a fine line, and risk alienating shareholders, employees, and clients — and losing their business — if they appear to support one cause over another.Matt Rinaldi, the chairman of the Republican Party of Texas, called Citi's decision <a href="https://www.cbsnews.com/news/citi-texas-abortion-law-paying-travel-costs-for-employees/">"appalling"</a> in March, and urged Republicans to snub the US' fourth-largest lenders services.Goldman's decision, meanwhile, comes just days after it revealed plans to <a href="https://www.bloomberg.com/news/articles/2022-06-22/goldman-sachs-plans-office-tower-in-dallas-for-5-000-employees?sref=ipW5reFz">occupy a new office tower in Dallas</a>, Texas, that would house up to 5,000 staff.Despite Wall Street banks' decision to cover travel expenses for abortions, Insider found that financial services companies — including Citi and JPMorgan — have <a href="https://www.businessinsider.com/wall-street-finance-anti-abortion-lawmakers-2022-5">given thousands of dollars in donations</a> to individuals who sponsored bills that stifle access to legal abortion.There's no question that financial-services firms have sought to position themselves as open, equitable workplaces. The industry's been long-dominated by white men, and firms have tried for years to broaden their appeal to women and communities of color.Friday's SCOTUS decision — and Wall Street's reaction to it — will be closely watched.Don't miss the below series of stories from Insider on how the overturning of Roe v. Wade impacts Wall Street and corporate America:<a href="https://www.businessinsider.com/goldman-sachs-bank-of-america-jp-morgan-roe-v-wade-2022-6">Here's how Wall Street is responding to the end of Roe v Wade.</a><a href="https://www.businessinsider.com/wall-street-finance-anti-abortion-lawmakers-2022-5">For the full story on Wall Street's financial backing of anti-abortion lawmakers, check out this report from Rebecca Ungarino and Angela Wang.</a><a href="https://www.businessinsider.com/goldman-sachs-to-cover-abortion-costs-for-women-to-travel-out-of-state-2022-6">Also, check out Goldman Sachs' memo on its updated healthcare policy.</a><a href="https://www.businessinsider.com/businesses-react-supreme-court-overturn-of-roe-v-wade-2022-6">Banks' biggest clients like Apple and Disney are also vowing to help employees impacted by SCOTUS' decision.</a>In other news:<a href="https://www.businessinsider.com/report-details-robinhood-internal-communications-to-gamestop-amc-meme-stocks-2022-6"></a><div type="image" title="GettyImages 530148986" height="684" width="912" msid="92492711" hostid="261"></div>2. A Congressional report has highlighted the confusion and chaos inside Robinhood during the meme-stock frenzy. Here's a peek at the 140-page report that unearthed surprise as the company execs <a href="https://www.businessinsider.com/report-details-robinhood-internal-communications-to-gamestop-amc-meme-stocks-2022-6">sought to deal with a capital call</a>.3. SoftBank-backed View has revealed that it's been under the SEC's microscope since January. Here's why troubled companies that used the de-SPAC route to go public should <a href="https://www.businessinsider.com/softbank-view-inc-rao-mulpuri-sec-investigation-2022-6">take note of the glass maker's woes</a>.4. Hedge funds Haidar Capital, e360's Power Fund, and Odey's OEI European Fund are all up more than 100%. Here's how the three funds have soared despite rivals' <a href="https://www.businessinsider.com/top-performing-hedge-fund-managers-haidar-e360-odey-2022-6">struggles to navigate the current market slump</a>.5. Bankruptcy pro Mike Kramer's fielding more calls as the market sours. The feared banker, and founder of one of Wall Street's best-paying firms Ducera Partners, <a href="https://www.businessinsider.com/mike-kramer-ducera-restructuring-bankruptcy-investment-banking-2022-6">explained how he sees things panning out</a>.6. Goldman Sachs is looking to raise $2 billion to buy distressed assets from Celsius, according to Coindesk. The troubled crypto lender tapped Alvarez &amp; Marsal to <a href="https://www.coindesk.com/business/2022/06/24/goldman-sachs-raising-funds-to-buy-celsius-assets-sources/">provide restructuring services</a>.7. Elon Musk asked Twitter for more data, so Twitter gave him more data. The social-media company has been "bending over backwards" to comply with Musk's demands, one person said. Here's how the billionaire is claiming that <a href="https://www.businessinsider.com/elon-musk-twitter-more-user-data-active-renegotiate-price-2022-6">what's received so far is insufficient</a>.8. This year's reshuffling of the popular Russel indexes has caused panic. That's partially due to <a href="https://www.businessinsider.com/overcrowded-index-rebalance-trade-leads-to-losses-for-hedge-funds-2022-6">index-rebalance trading levels soaring at funds</a> like Millenium and ExodusPoint. But then, that densely-populated strategy got torched. Here's <a href="https://www.businessinsider.com/2022-russell-rebalancing-what-you-need-to-know-millennium-2022-6">what you need to know</a>.9. Vienna was just ranked the most-livable city in the world. Western Europe and Canada dominated the list, which featured <a href="https://www.businessinsider.com/vienna-austria-worlds-most-livable-city-ranking-economist-auckland-europe-2022-6">no US cities in the top 10</a>.10. Eleven Madison Park — the <a href="https://www.businessinsider.com/eleven-madison-park-vegan-labor-shortage-chaos-2022-6">newly vegan, understaffed restaurant</a> — scrapped plans to raise pay after a negative New York Times review. Leaked documents revealed the famed venue <a href="https://www.businessinsider.com/nycs-eleven-madison-park-killed-plans-pay-prices-2021-2022-6">knew it paid its staff "too little."</a>Done deals:<ul><li>Private investment firms Hellman &amp; Friedman and Permira have agreed to <a href="https://www.businesswire.com/news/home/20220624005233/en/Zendesk-to-Be-Acquired-by-Investor-Group-Led-by-Hellman-Friedman-and-Permira-for-10.2-Billion?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_axiosprorata&amp;stream=top">buy software firm Zendesk</a> for $10.2 billion. </li><li>Blackstone has bought Australian casino and hotel operator <a href="https://www.blackstone.com/news/press/blackstone-completes-acquisition-of-crown-resorts-in-the-firms-largest-investment-to-date-in-asia/">Crown Resorts</a>. The private-equity firm completed the deal for <a href="https://www.afr.com/companies/games-and-wagering/blackstone-8-9b-takeover-of-crown-ends-packer-s-reign-on-asx-20220623-p5aw7v">roughly $6.3 billion</a>.</li><li>BC Partners has entered <a href="https://www.3i.com/media-centre/corporate-and-portfolio-news/2022/3i-enters-into-exclusive-negotiations-for-the-sale-of-havea-group-to-bc-partners/">exclusive discussions</a> to acquire French natural healthcare firm Havea from 3i Group for roughly $1.2 billion.</li></ul>Curated by Aaron Weinman. Tips? Email <a href="mailto:aweinman@insider.com">aweinman@insider.com</a> or tweet <a href="https://twitter.com/aaronw11">@aaronw11</a>. Edited by Lisa Ryan (tweet <a href="https://twitter.com/lisarya">@lisarya</a>) and Hallam Bullock (tweet <a href="https://twitter.com/hallam_bullock">@hallam_bullock</a>).

Wall Street: Finance's Roe v. Wade conundrum

Union Square AdvisorsWayne Kawarabayashi, Partner and Head of M&amp;A, Union Square AdvisorsIn light of the current state of the global economy, capital market conditions and political climate, many are wondering what lies ahead for this year's technology M&amp;A market. In the U.S., we are closely watching the Trump administration as it pursues its agenda to tighten immigration and the U.S. borders, renegotiate trade agreements, replace Obamacare, and enhance defense and infrastructure spending. Against this backdrop, the economy continues to improve and we are entering the eighth year of a bull market. Further, the technology sector is growing, has abundant access to equity and debt capital and remains very active in M&amp;A, as evidenced by strong 2016 M&amp;A volume and several notable transactions thus far in 2017. In short, we are expecting technology M&amp;A to continue to be active for the rest of this year.<h2>Drivers of Technology M&amp;A </h2>We believe there are many positive drivers that will continue to support M&amp;A and investment activity in the technology sector this year. The equity markets continue to trade at record highs following the 2016 U.S. election, boosting investor and corporate confidence. Corporate earnings continue to improve and companies are looking to take advantage of this administration's plans to lower tax rates, effect a tax holiday on foreign cash repatriation, loosen regulations (e.g., HSR, Dodd-Frank) and enhance federal infrastructure spending by $1 trillion. At the same time, inflation seems to be in check and interest rates remain historically low, despite the Federal Reserve's two rate hikes since the election. Companies have large cash war chests for investments both domestically and overseas (the top five technology companies have an estimated $1.7 trillion in cash with $500 billion of it overseas) and there are large pools of capital in private equity, venture capital, pension funds and lending institutions waiting to be deployed as well. <a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0BXZ0E65656&amp;SMLS=1&amp;RW=1588&amp;RH=896#/SearchResult&amp;VBID=2C0BXZ0E65656&amp;SMLS=1&amp;RW=1588&amp;RH=896&amp;POPUPPN=6&amp;POPUPIID=2C0BF189X2KW">REUTERS/Lucas Jackson</a>Lastly, if companies are reticent to act, hedge fund activists may continue to demand board seats, return of capital and evaluation of strategic alternatives to catalyze M&amp;A activity as they have done successfully over the past few years (e.g., Elliott Management's recent activist campaigns with Cognizant for board seats and with The Advisory Board to consider strategic alternatives). <h2>Technology M&amp;A Off to a Solid Start</h2>Year to date, we've seen solid activity with large technology corporates becoming more active with M&amp;A, even plucking them before they go public, as evidenced by Cisco's $3.7 billion acquisition of AppDynamics. We've also seen several publicly-traded companies agree to sell themselves despite the overall strength in equity markets such as Mobileye's $15.3 billion sale to Intel, CEB's $2.6 billion sale to Gartner, Ixia's $1.6 billion sale to KeySight and Nimble Storage's $1.1 billion sale to HP Enterprise. Some strategics have become even more aggressive including Virtu Financial's $1.3 billion unsolicited offer for rival, KCG Holdings. Lastly, almost every week there appears to be a new company rumored to be for sale. Non-technology companies' pursuit of technology will likely continue as well following last year's activity including Walmart's $3.3 billion acquisition of Jet.com, General Motor's more than $1 billion acquisition of Cruise Automation, Unilever's $1 billion acquisition of Dollarshave.com and General Electric's $915 million acquisition of ServiceMax. This activity will be driven by the pervasiveness of technology throughout other industry sectors as more physical devices become technology-enabled, more information needs to be collected and analyzed, and more activity shifts to the Internet and cloud.<a href="https://www.youtube.com/watch?v=tMs3ZUThyhQ">YouTube/Dollar Shave Club</a>According to our compilation of market data, we experienced another strong M&amp;A year in technology, media and telecommunications with $583 billion of M&amp;A volume in 2016, a modest decline (six percent) from 2015's record $621 billion of volume. In addition, we saw more M&amp;A transactions in the sector at $1 billion or above in 2016, although dollar volume was lower (107 deals for a total of $497 billion) versus 2015 (79 deals for a total of $528 billion). While sector M&amp;A volume has been on the upswing over the past two years, we've also seen the level of technology IPO and private placement volumes rapidly decline over the same period (21 technology IPOs in 2016 vs. 34 in 2015, according to our compilation of market data). In part, the increase in M&amp;A has been supported by lower activity in capital raising. <h2>Private Equity </h2>We expect private equity and other investment management organizations to remain active this year. While they will continue to evaluate acquisitions of go-privates and private-to-private transactions, they will also evaluate alternative structures as demonstrated by CPPIB's 48 percent investment in Apax-owned GlobalLogic (valued at $1.5 billion); Apollo and HGM's $2.8 billion merger of SourceHOV, Novitex and Quinpario; and Veritas' $690 million carve-out acquisition of Harris' government IT services business. We also anticipate that private equity will continue to make PIPE investments into public companies such as last year's $500 million investment by Silver Lake in Symantec which helped support Symantec's acquisitions of BlueCoat for $4.7 billion and LifeLock for $2.3 billion. On a related note, private equity firms are increasingly acquiring platforms for the purpose of effecting further consolidation. Therefore, in addition to the aforementioned Silver Lake/Symantec's consolidation of companies, last year, Permira and Hellman &amp; Friedman's Genesys acquired its publicly-traded competitor Interactive Intelligence for $1.4 billion, and this year, Vista acquired DH Corp for $3.6 billion to combine it with its portfolio company, Misys. <h2>Technology IPO Market Ramping Up</h2>AppDynamics, which was swept up by Cisco, was supposed to lead off the technology IPO market in 2017. Instead, messaging app company Snap earned those honors. In early March, Snap raised $3.4 billion, priced above its offering range, and traded up 44 percent on its first day of trading. Several other IPOs followed Snap and performed above their IPO prices including enterprise software developer Mulesoft, data analytics provider Alteryx, security company Okta, and software firm Yext, which ended up 46 percent, 11 percent, 38 percent and 22 percent, respectively, higher on the first day of trading. <a href="http://business.nasdaq.com/discover/market-bell-ceremonies/detail.html#!/!?ceremonyId=7563">NASDAQ</a>While IT services provider, Presidio, priced below its offering range and traded only a modest 1.9 percent above its IPO price on the first day of trading; and Brazilian online retailer, Netshoes, priced at the low end of its range and traded down 11 percent on its first day. Still, others are looking to come to market in the first half of 2017 including Carvana and Cloudera.While the IPO market for technology is beginning to open, it is always difficult to predict how long the window will remain open. We've seen equity market volatility in March despite the launches of these recent IPOs. Dual track processes, whereby a company uses its IPO filing as a marketing opportunity to simultaneously explore a sale, will continue to be an option for IPO candidates as they seek to hedge their bets and try to maximize value in a sale versus going public. In 2016, KKR bought Optiv for $1.9 billion and Symantec bought Blue Coat for $4.7 billion, while in 2017, Cisco bought AppDynamics after all three companies filed to go public. While some private technology companies will be able to access the public equity market, many more private technology companies and their investors will proactively consider alternative monetization options including raising additional capital for growth while valuations still remain relatively attractive as well as seeking exits to strategic and growth-oriented private equity firms. This year, we've seen two large venture-backed companies exit via a sale to strategics including SimpliVity's $650 million sale to HP Enterprise and Veracode's $614 million sale to CA. <h2>Thomson ReutersThe logo of India's largest online marketplace Flipkart is seen on a building in BengaluruCapital Raises and Unicorns</h2>The private capital markets also remain active with sizeable investments. This year, there have been several large private capital raises including Koubei's $1.1 billion raise with Silver Lake, CDH Investments, Yunfeng Capital and Primavera Capital consortium of investors; FlipKart's $1 billion raise with eBay, Microsoft and Tencent; WeWork's $300 million investment from SoftBank; Magento's $250 million investment from Hillhouse Capital; and Tricentis' $165 million investment from Insight Venture Partners.It will be interesting to see what the large private technology unicorns will do in 2017. After enjoying several rounds of large capital raises at high valuations in recent years, these unicorns are now finding it difficult to continue to justify these higher valuations with each successive capital raise. Investors in private technology companies typically enter at different time periods and at various pre-money valuations, therefore each investor has different expectations for value and time to exit. We are seeing that some companies aren't able to continue to drive higher pre-money valuations with each capital raise, as some of the air has been let out of the unicorn phenomena. As a result, some of these companies are proactively exploring exits to strategics, seeking alternative sources of capital including debt and hybrid securities, and replacing one set of investors for another in secondary buyouts. The large unicorns, including Airbnb, Dropbox, Uber and Pinterest, will continue to watch to see when they might best tap the IPO market. <h2>Headwinds to Watch</h2>While there continues to be positive drivers that support an active M&amp;A year in technology, there are several headwinds to watch. First, as strategics and private equity firms continue to evaluate target companies to buy, there is a growing sentiment amongst these buyers that valuations, propelled by the strength of the equity markets, low cost of debt and an increased buyer universe, are getting expensive. There is also concern amongst the PE players that the high EBITDA multiple that one has to pay today might contract if the bull market subsides over the coming years, thereby lowering the multiple at exit and impacting IRR returns. Further, if tax law is enacted to eliminate tax-deductibility of interest expense, this could also dampen returns, although it would likely be partially offset by a reduction in corporate tax rates and full expensing of capital expenditures. Thomson ReutersNFL: Super Bowl LI Champions-New England Patriots White House VisitSecond, there is the potential that the new administration's "America First" view towards foreign relations could dampen or at the very least increase scrutiny for cross-border M&amp;A activity, especially for U.S. technology assets that are of national importance (e.g., CFIUS review). While we've seen CFIUS and past administrations intervene on a number of Chinese acquisitions of U.S. companies, the recent decision to block Germany's Infineon Technologies acquisition of Wolfspeed begs the question of whether the CFIUS mandate has been broadened to include European allies as well; albeit this is only one example. Further, changes in immigration and international trade policies could also impact the organic growth of U.S.-based technology companies making buyers and targets more susceptible to revenue, earnings and foreign exchange rate volatility, thereby increasing reluctance to make big technology M&amp;A bets.Third, the recent withdrawal of the American Health Care Reform Act of 2017 by the Republicans in Congress has increased market volatility as investors wonder about the Republicans' ability to push through tax reform, infrastructure spending and other economic and market enhancing policies. Lastly, the growing tensions in Syria and North Korea, as well as the outcome of the French elections and Brexit could continue to enhance market volatility and weigh on the minds of investors, tech buyers and sellers.<h2>Final Thoughts</h2>Despite some potential headwinds, we think the market dynamics will support another strong year for technology M&amp;A in 2017. We will continue to see acquisition and investment activity in the following areas: cloud transformation, cybersecurity and network visibility, big data/data analytics, vertical and horizontal as-a-service offerings, converged IT solutions, mobility, advertising technology/marketing technology, e-commerce, mobility solutions, healthcare IT, fintech, Internet of Things, Internet of Humans, machine learning/artificial intelligence/intelligent applications, and augmented/virtual reality. While some technology companies will see exits via IPOs, the vast majority will continue to tap the private placement market and find growth equity and private equity buyers who are flush with cash as well as seek full exits to large and mid-sized strategic buyers. The technology sector remains robust and developments in innovation and the convergence of technology will drive companies to make offensive and defensive moves to stay ahead of the game.Kawarabayashi is head of M&amp;A at Union Square Advisors, is a leading technology-focused investment bank that offers strategic mergers &amp; acquisitions advice and execution as well as agented private capital financing services. Founded in 2007, with offices in San Francisco and New York, Union Square Advisors works with leading public and private technology companies, private equity and venture capital firms across the technology landscape with a primary focus on Software, Software-Enabled Services, IT Infrastructure and Internet/Digital Media. <h3>NOW WATCH: <a href="http://www.businessinsider.com/pepsi-pulled-controversial-ad-kendall-jenner-2017-4">'Clearly we missed the mark': Pepsi just pulled this controversial ad</a></h3> Please enable Javascript to watch this video

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