Finance


Townsend, who represented VMware in connection with the Dell-EMC deal, said transactions of that size or larger may become much more commonplace. They could also come in unexpected places, as Google pushes into cloud services and automation, Apple shows its willingness to spend on original content and Amazon moves into the physical world through the acquisition of Whole Foods.

The dominance of big tech has had a cooling effect on the IPO market. The past two years have been the slowest for technology offerings since 2009.

In addition to start-ups’ concerns about taking on the big platforms, they have at their disposal a flood of capital from new funding sources, such as Softbank’s $100 billion Vision Fund, allowing them to stay private for longer periods of time.

Larry Sonsini, founding partner of law firm Wilson Sonsini Goodrich & Rosati, said he expects IPOs to be near a historic low in 2018.

Sonsini, who has represented Apple, Alphabet and Netflix, said there’s “a paradigm shift taking place” with more value accruing to start-ups than to companies that go public, and with big companies looking to the private markets as the place where they’ll open their wallets. Facebook has taken that approach for several years, snapping up venture-backed companies Instagram, WhatsApp and Oculus.

“That will lead to more power by some of the giants, who will start consolidating more and taking companies off their IPO track,” he said.

Apple, Microsoft and Alphabet are best positioned to take advantage of the Republican-backed tax bill, as they’re sitting on overseas cash and marketable securities totaling more than $500 billion, which can be repatriated at a lower tax rate. Also, the corporate federal income tax rate will drop to 21 percent effective this year from 35 percent.

“If you’re looking to deploy cash, U.S. targets just got a lot cheaper,” said Jamie Wickett, a partner at Hogan Lovells. “You’re effectively on sale to anyone looking to buy a U.S. company.”



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