Marc Andreessen forecasts a surge in M&A in tech in 2016 and 2017, is seeing more M&A in the pipeline than in last four years
Venture capitalist Marc Andreessen spoke at the Bloomberg Technology conference this afternoon, and he said he expects far more M&A than the tech industry has seen in recent years.
Context & Ripple Effects
A year earlier, Andreessen had diagnosed the opposite problem: activist investors' near-term obsession was suppressing acquisitions by tech incumbents, while high private valuations were keeping both M&A and IPOs slow. His June 2016 Bloomberg Technology appearance marks the pivot — he now claims to see more deals in the pipeline than at any point in the previous four years.
The forecast matters because it comes from someone positioned to know: as the New Yorker profile established, Andreessen Horowitz sits at the center of the startup-to-acquirer pipeline it is describing. The later Gartner data showing US, Canadian, and European tech deal counts hitting a then-record 1,264 transactions in Q4 2020 suggests the consolidation wave he called did arrive, just on a longer fuse.
First-order effects
- Founders and venture portfolios regain an exit path beyond the IPO: with acquirers back in the market, the private-valuation overhang that stalled exits becomes a negotiable acquisition price instead of a blocker.
- Tech incumbents face renewed inbound interest from buyers and sellers alike, reversing the deal freeze they had imposed under activist-investor pressure.
Second-order effects
- If deal flow materializes as Andreessen predicts, the activist-investor constraint he identified in 2015 either eases or gets priced around, since boards defending against activists can no longer justify sitting on cash while peers consolidate.
- Rising acquisition activity bids up valuations for late-stage private companies, tightening the gap between private marks and public-market prices that had kept both M&A and IPOs frozen.
Third-order effects
- A sustained consolidation phase reshapes industry structure toward fewer, larger acquirers — a pattern the Gartner data later corroborates, with quarterly transaction volumes climbing from the post-2016 recovery to the Q4 2020 peak of 1,264 deals.
- If M&A substitutes for IPOs as the default exit, capital formation in tech shifts toward acquirer balance sheets and away from public-market listings, changing which companies ever face public scrutiny.
The trend: Tech cycles between M&A droughts driven by activist pressure and inflated private valuations and consolidation waves that absorb startups before they reach the public markets.