Digital Dealflow M&A & IPO Activity in Crypto Markets DAS London 2025 Day 2 Investor
Summary
M&A Activity: The podcast highlights a significant increase in M&A activity in the crypto sector, driven by regulatory shifts and increased interest from both sellers and buyers, including traditional financial institutions.
Crypto M&A Uniqueness: Crypto M&A deals are unique due to their early-stage nature, requiring more expertise and a deep understanding of the industry, as well as a strong crypto network for successful transactions.
Market Trends: There is a growing institutionalization within the DeFi sector, with more traditional financial entities engaging in the crypto space, indicating a shift towards a more regulatory-compliant environment.
IPO Impact: Recent IPOs in the crypto space have positively impacted the M&A market by providing more exit options and increasing transparency, which helps in valuation and strategic decision-making for potential buyers.
Strategic M&A Considerations: Founders are advised to consider strategic M&A as a long-term investment, focusing on liquidity, equity participation, and strategic positioning rather than just headline valuations.
Infrastructure Focus: There is a strong focus on building infrastructure within the crypto space, including non-custodial wallets, spot trading, and staking, which are seen as foundational for long-term market positioning.
Real World Assets (RWA): The integration of real-world assets into DeFi is anticipated to grow, though caution is advised due to the differing risk profiles between on-chain and off-chain assets.
Timing and Preparation: The current market window is optimal for starting M&A processes, with preparation being key to success, as it allows companies to present quality materials and strategic narratives to potential buyers.
Transcript
Well, I guess let's get this session started. It's more timely than ever. We are deep in the M&A season, as people like to refer to. Um, we have an absolutely outstanding panel today to discuss M&A, IPO, and deal making more generally in crypto. So, let's kick it off with a brief uh introduction session. Alvin, kick it off. Hey, good afternoon everyone. Um, my name is Olwin Clark, co-head of investment banking at Galaxy Digital. Um, I will give you a longer background later on as we get into sort of how we got into this, but I'll keep it brief for now. Bonjour. I'm Lauren Ba. I'm the co-founder and CEO of MV Capital and uh, yeah been in crypto for a little bit too long perhaps. So since uh 2017 and I launched MV Capital which is could be seen as a vurator and uh liquid fund uh specific on a market neutral strategy uh within those last five years. We now manage a little bit more than $2 billion. The only specificity we have is that it's a fully on chain and uh following a market neutral approach and pleased to be here. Thank you for invitation. Hey everybody, Casper Johansson, co-founder of Spartan Group. We have an asset management business where we have uh liquid fund strategy, venture strategy, and market neutral strategy. Then we have an investment banking business which I run where we do M&A and capital markets. Uh and the M&A side and capital market side is what we'll be uh talking about today. Awesome. And my name is KL Martinand. I'm a co-founder at Arita. We're an investment banking firm exclusively focused on the crypto space. 15 people around the globe and founded in 2022. Um, X Blackstone and JP Morgan people. So guys, let's chat about M&A season. Um, everywhere I go, I talk about investment banking and it's like guys, you must be having a great year. Tell us how how has your year been, Elvin? Yeah, look, it's it's been busy. Um, in in the shortest in a sentence, uh, look, this year has been all about M&A. Um, if I look back over the last few years, there had been more focus on capital raising. It had been challenging to get deals done in terms of the bid ask spread and where investors minds were at in terms of confidence in the digital asset space, the crypto ecosystem more broadly. This year, we're seeing the stars align. And what does that mean? It means we're seeing founders and owners of businesses more interested in transacting um and more open to to coming to market. We're seeing regulatory shifts in the US and globally which is making the space more attractive for fintech and traditional financial institutions. And we're seeing more crypto businesses go public. And what does that mean? It means more businesses that are able to deliver liquid currency into deals. So fundamentally we're seeing a lot more M&A activity both in terms of um sellers who are interested in coming to market and buyers who are able to one deliver meaningful valuations and two deliver interesting uh transaction structures for sellers. So it it's been busy on our side but I'll hand over to others too to share their perspectives. Yeah. Oh, maybe before we ask Casper about his year, who in this room, quick show of hands, has been involved in a M&A transaction or IPO in in their career to level set. Okay, so we have a room of experts out of that group who has been involved in a crypto M&A transaction or IPO. Okay, so that's almost 100% uh we have a crypto M&A expert crew here. So let's go a bit deeper maybe. Casper, what do you think makes crypto M&A unique um even within let's say the more traditional M&A context and and yeah tell us a bit about the differentiating factors that you see in crypto deals why for example also is a advis is an advisor with crypto expertise uh better positioned to work on crypto deals or or what is needed really um when you take on the Spartan? Yeah, sure. So, I worked for a long time in traditional M&A at uh at Goldman Sachs where um you know we would have industry teams. I sat in the natural resources industry. I covered power in form of coal, gas, nuclear, renewables, chemicals upstream, downstream, midstream, oil and gas upstream, downstream, midstream, infrastructure. So obviously in each of those segments I was not an expert but I was running these billion-dollar M&A deals um and could kind of get by because these were like very late stage companies. The deals were $500 million and up. I think crypto is still because we're still quite early. I mean there have been up to three billion dollar kind of transaction sizes with a derbit deal but generally the deals are earlier stage companies um which requires more work from the adviser as part of the transaction to kind of just get the company ready and a deeper understanding of the industry. It's also um a lot of the companies have relatively young founders um who maybe this is like their first job or they haven't done that many other things and they're very passionate about crypto. So, I think to get a um a good outcome of a crypto M&A deal, you need three things. You need M&A product expertise, which you only get by doing it for 5, 10, 15, 20 years. It's not like a fundraising round. You can you can pitch to 100 investors, you have a good pitch, you're a strong founder, you can get it done on your own. Like, I think there's value to an adviser, but M&A transaction, I do not recommend a founder undertake that by themselves. The second is um you need a crypto network. You need a network of people that have an idea of who's a red acquirer for this asset. It's not like a fundraising round where you just hit a hundred names and just you know you have this funnel that you go through. It's much more bespoke. And then you also need an understanding and passion for the industry and the business so that you can position the the company right. Um, so just to make a a small plug on that point, I would say we're starting to see what I would call non-cryptonative advisory firms come into the space. So the three of us, um, Galaxy, Arena, and Spartan were all cryptonative. Uh, we're starting to see other like midsize banks come in, uh, and some fintech, uh, banks come in also, um, and take some some market share from us. But I I do think that from if if I'm a founder, I would want, you know, by all means, you know, have have people pitch for the the work and and then select your best adviser. But I think being cryptonative is very important to get a good outcome on an M&A deal. Yeah, I mean I I will pick up on that point because I would say it does not just apply to your M&A advisor. Um, something that we're very thoughtful about when we're working with our clients is making sure they have the right support across the transaction. Whether that is council, whether that is accounting, whether that is audit, um, you need the right people around the deal who understand a how to get deals done, but b understand the nuances of crypto and what that means for your transaction because what you don't want to be doing is paying people to learn. uh fundamentally you need people who are able to come and deliver meaningful advice and get a deal over the line for you. Yeah. And that's I I think even leaving aside the fact that we may see more and more deals actually involving tokens and uh having unique structures that obviously outside of crypto would have been unthinkable. And so yeah, there is a new paradigm I think evolving in the crypto M&A space which we're all very excited about driving. And yeah, I think we're seeing an early really early innings also on the onchain and and token M&A um spectrum. Lauron, how how have you seen this year really? Um also Xin investment banking background um you probably have a very nuanced view as well uh especially maybe around token M&A anything you see in the onchain world that you think is worth sharing? Yeah. um at the difference to my colleagues which are more on the M&A side and the early stage uh of any deals uh with MV Capital we will come more at the late stage. So once the project is live you you need a liquidity bootstrapper or vault curator to really like to to bootstrap to foster uh what my colleagues uh first invest in. Uh the year has been busy, not to take back your term, positively busy. Uh we saw of course more institutionalization not only uh in crypto but more specifically on the DeFi sector. Uh I remember like couple of years ago we were just between a a small scene of crypto bros as we used to say uh to now a more regulatory compliant uh sector that uh basically make a huge metamorphosis of what we were doing like three years two years ago. Now I see a real change of the industry that become way more institutionalized. Uh regarding the M&A like as a whole or token M&A if I may say this way. Well the the market is extremely f fragmented yet. Um but thanks to some like uh would it be Mika compliance rules or more clear uh genius act um uh regulation um it allows us to uh yeah to go to the next step on on on DeFi and it's true like I think those last those next six to eight months we will see a bridge between like traditional finance uh to more DeFi and I'm really happy to work with you guys to to help the the sector to to go this way. Awesome take and I mean we are obviously in the largest or hottest M&A window we've ever had in the industry but let's maybe discuss a bit and we haven't even talked about it between us but where do we stand in that cycle like are we seeing the top are we nearing the top um there is so many good conversations now happening which um at least in the history of Arita which has been basically one cycle uh we've been yeah I mean just amazed to see also the new interest coming in. Uh spent some time actually yesterday with buyside funds, mid-market PE funds now looking at crypto assets which is just an amazing uh dynamic to see and as as X Blackstone private equity professional uh obviously want to see more and more uh of our like-minded u financial investors come into the uh space and instit help institutionalizing what are already great businesses. Um what else what are the trends that you're seeing Casper? Um are there I don't know uh traditional buyers coming in uh what are the dynamics you're seeing on the ground that may lead to us thinking we're more advanced in the cycle and or or yeah just share a bit of your thinking on where we stand. Yeah sure. Um, we started Spartan in 2017, so I've been through a a few crypto cycles already and and um I'd say we're definitely at a very strong point in the cycle since uh or still this weekend this massive draw down that happened and bit of shock to the market. I didn't it's early days. I mean, it's only a couple days since that happened, but in in past cycles, I've seen something like that really jolt um M&A deals. um even though M&A deals should be long-term and strategic, they're actually very susceptible to market moves also. And this time around, I didn't really feel any of the buyers were on the sell side flinch. Um so that's very positive. Um at the same time to your point I am starting to see some more traditional buyers and not just like buyout funds but also strategics like if it's a data company maybe like traditional data company if it's a regulated exchange maybe you know more traditional fintech buyer poking around. Um and that to me is if you think of the market in cortiles is it typically comes from my experience in the third quartile of the market and then you got to get a deal done with them before you hit the middle end or the fourth quartile because those players will disappear immediately um if the market becomes a little bit um fragile. I love that answer. So we still have one quartile to go. Alvin, how are you capital? I'd say one and a half one and a half two. Okay. What do you think, Alvin? Um, look, if I could call the top, I'd be on a beach somewhere sipping my ties. Um, from if I'm completely honest, and I see some familiar faces who have heard me say that before. Um, I would say though that this is, you know, as people in the room who are thinking about undertaking strategic M&A, and that's the word that Casper used there, strategy and strategic thinking is the right way to think about this. From a seller perspective, um, of course in the moment within a particular process, you want to, uh, obtain the best deal possible, but there are multiple different ways to construct the right deal. And that doesn't just necessarily mean top ticking the headline valuation. Um, it might mean how do you get the right amount of liquidity up front. It might mean how do you make sure that you participate in the equity upside for the long term. It might mean how do you make sure that you are able to if you're thinking about moving on to do something new able to exit the business within the right time frame that is appropriate to you and so there are there are a number of different factors that I would be thinking about as a seller from a buyer's perspective you know again to Casper's point I think there are some some buyers out there particularly the non-cryptonative ones who worry about are they about to to buy at the top of the market. But really, this is about the the real strategic buyers understand that this is a long-term uh strategic investment. And this is not about generating return in two years or three years or 5 years. It's about positioning your business for the next 10 years or 20 years or 30 years. And those are the buyers who have conviction. Those are the buyers who don't flinch when they see a small draw down over the weekend. Um small um and and that's what we're bringing together. And I think today in the market we are seeing a much larger pool of high conviction strategic buyers who are able to deliver value. And we're also seeing founders and management teams take a more strategic view around where does their business end up and what does that mean for the long-term value creation for them? Any interesting or particular verticals you're thinking about? I think to today we're seeing a lot of focus on on anything that you could loosely term infrastructure. Um, and so that has different meanings to different players in the space. For some players in the space, infrastructure means being able to offer non-custodial wallets. For some players, infrastructure means being able to offer spot trading. For some, it means derivatives trading. For some, it means staking and yield on chain. Um, but they all wrap it in this language of infrastructure. And I think that's important because it tells you where people's heads are at, which is that they are thinking about how do I build a platform that I can continue to build on going forward. What are the building blocks that I need to have a long-term position in the market as opposed to what is a product that I can monetize over the next 12 months. On the point of yields on chain, no, what is there to see currently that would let us conclude on where we're trending? Any specific dynamics you've been seeing lately, whether that's with LPS, on your strategies, on you know, money movements that you find noteworthy. Um, I don't know. I would like to coin like low-risk DeFi may may may occure now like we have been doing DeFi for those last three four years professionally. Now for example the last uh partnership uh I succeeded to to call in is with a French bank called associate general corporate investment banking. uh this bank now ask uh liquid fund uh such as and curator such as MV Capital to originate and distribute Euro stable coin. Sorry, I'm pro- European. I would like Europe to have their own Euro stable coin. So, please let us try at least. Um and then yeah like yesterday it was a foundation or Ethereum ICO participant that used that used to be and still are our LP today is multinational banks that uh try to originate and foster um um AWA or stable coin within the ecosystem. So to me it shows the color of what will be um defy within the next uh decades. Uh I thought defy would have turned permission defy or some say per um corporate chain defy but with associate general we just realized that uh this bank which is the second biggest one in in France is distributing their products on a public chain without any like uh permissioned uh barrier. Uh so I'm still I'm extremely positive uh to where DeFi is going. It's just that uh it will change the APR will change the cons the the the degree of conservativeness if it's a word will change. Um I think uh next client will be become way more risk averse. So it's uh also the work of uh of Spartan and of Emily Capital to propose what we call the riskadjusted deal. Yeah. And to get back on your point what happened this weekend, I would like to highlight that uh uh CX we saw again the limit of centralized exchange while on defy liquidation went well. No bad depth has been reported. unis swap and other protocol um didn't went off. It was still working every minutes. So I hope you you appreciated the I hope you appreciated the the yeah the resilience of D5 during those kind of black swan. Uh so I think uh DeFi has been a little bit undervalued for what it was and again this weekend um yeah we show the resilience of of DeFi compared to CX. Yeah definitely a highlight in uh what otherwise I guess was a yeah more dramatic or or a negative weekend for all of us here. Um, another highlight I want to say over the last 3 to 6 months was obviously the wave of IPOs, you know, driven by the largest U US conglomerates, exchanges. I know Casper, you followed them uh pretty closely. Share a bit of context or set the scene for the IPO landscape uh currently and then we can talk a bit about what's to come next and and uh what that actually does to you know our work also more on the M&A side. Yeah. Okay. So we we should definitely talk about that because IPO has a massive downstream effect on the M&A market. But in terms of the IPO market overall, um obviously it was kicked off with a circle IPO that went um above all expectations and is still trading at um you know a good level compared to um the IPO level for for a long time. you know, probably since 22, there was a pretty active and liquid secondary market in shares of Kraken, Circle, not so much Gemini, but some bullish um and a bunch of the other companies that are kind of scheduled for IPO now where they were trading hands at very attractive valuation. our fund picked up some of those too like early employees selling you know funds that just needed some some liquidity um because there just was no outlook to getting any liquidity in these shares so people are happy to sell at you know 70% discount to the latest round um so now with with the circle IPO happening which is um also very much a regulatory political thing in terms of just the SEC being willing to sign off on the these IPOs so the the political situation. The US definitely has played a massive role in that. Um and then you know I still think we saw circle uh we saw figure markets we saw Gemini um bullish and I I it's still a relatively fragile market from the perspective of there's not still not that many comps out there. So, I'm kind of holding my breath every time a new one goes out because if one of them doesn't go well, it it it will impact the next one in in the queue. We're not at the point where there's 20 of them and if one goes bad, you could say you could point to that one and say, "Oh, there's specific reasons why that went poorly, but the next one will be fine. I think we still relatively fragile, but it's just it's great to see the market opening up." Totally. And I mean more IPOs means we get more quarterly reports uh more eyeballs from Wall Street and I think it just makes the space a lot more institutional and the the crowd of uh or basically the people looking at the space just shifts over shifts over time right and I think that's a um yeah a huge indirect benefit to to everything we do on the dealm side how do you think it affects uh your business also obviously one of the largest EU conglomerates Yeah, fundamentally um it's it's good for for M&A. Um as Casper says, I think having having public comps is helpful. It helps that particularly the non-cryptonative players who are looking at the space think about valuation and what makes sense and compare business models as they get a bit more transparency in a format to your point um that Carl that that they can understand and digest. Um it also helps more broadly, right? because I think we've been in a period for the last few years where the exit options for investors in crypto businesses were were relatively thin because the M&A market was challenging um and the IPO market was closed. Uh since we've had the new administration come in in the US, an IPO is now a viable exit. And that's very powerful because what does it mean from specifically an M&A perspective? It means you have a tool in your you have access to a tool that we didn't have access to before which is the dual track process and this is where you know you can bring in an independent financial adviser like the players up here who who know how to run an M&A process but also know how to prepare for an IPO process and that allows you when you're going to market and thinking about M&A options to have uh another another option another lever that you can pull in terms of bringing competitive tension to that process and that's always powerful. Um, in terms of thinking about executing that, you know, from a seller's perspective, there is a lot of overlap between the materials you need for an IPO and the materials that you would use for a sale process. Um, and with the right team around it, you can manage that very efficiently and very effectively. So, net net fundamentally, more IPOs is is very good for the space. It helps with M&A momentum. It helps deals get over the line. It helps with pricing deals. And for sellers in market, it materially helps with them in terms of thinking about their opportunities and how they want to exit the business. Totally. And I mean, it just I guess increases the amount of viable buyside candidates we have in the space. I mean now having I mean billions of liquid equity and stock is something I mean it's a huge development of 2025 and it's something that we all didn't have access to also when working through our site M&A mandates. Um and I think what's maybe useful also for the um audience to understand is that people that are in the queue for an IPO process they typically stop looking at M&A 6 months 12 months um before the IPO because too many things could go wrong. you need to get the accounting right. Uh integrating an acquisition while basically the entire firm is just looking forward to that IPO is just something something incredibly tricky to do. So um all these guys getting through the queue now um is actually just I think spilling oil into the fire of uh larger M&A transactions and so quite keen to see these guys now coming back to the buy side and and getting very active. Uh it's needed for their public story. um they have a lot of uh liquid stock to to to now also do uh interesting acquisitions and you know in public markets um story sometimes is as important as as the execution and so viable M&A strategy and and uh showing the market that you are able to integrate uh businesses and and look forward and do acquisitions is I think something that we'll see uh a lot from the ones that have already gone public and then I guess even more so uh from the ones that are yet to come. Um maybe now uh we're uh just shy about 10 minutes left. Lauron, tell us what you're looking forward to also on the onchain space now. Um a brief outlook. What uh what are you watching? Um have the audience understand from uh also the American yield perspective? Uh what are the interesting trends to follow? Anything to spot uh when when thinking about the next couple of months and quarters? I think it's uh the CEO of Black Rockck that say that there is a trillion of dollar of token tokenized asset that will come on the market within the the next decade. So I agree with him. Um however those last six months I think we refused around 60 RWA projects. uh DeFi is not the bean for like low rated uh credit risk uh assets. Uh RWA will be there. AWA will be the next big thing. LWA is almost infinite can tokenize anything from fig to real estate to export finance to go depth to corporate depths to credit cards loans to anything. uh but it's also comes with all the risk because actually the the the probability of default the probability of recovery is totally independent from uh defy so this bridge between the real world assets which I see in bank uh well we call it risk weighted assets so that's why the acronym is a little bit weird but so the bridge between LWA and and onchain is is is absolutely another world uh now I I think every D5 fund uh will need to have their own uh credit risk analyst. Uh the risk of counterparty of a smart contract is not the same of a risk of counterparty of a collapse of of any underlying asset. So let's be careful this time about RWA. We tried I think back in 2022 it's totally failed. Uh maybe this time will be different if I may say. uh it will come but we have to be extremely careful not to mix again uh onchain with offchain but the bridge is there the bridge the bridge is there so it's not if but it's when so LWA uh narrative um is something to to look at stable coin narrative I know you already heard it like million times but it's coming it's not just on the news every banks these days wants to have their own stable coin. Would it be to I don't know sell their repo or sell their banking activity uh through their own stable coin but again defy is not the bean to do recursive borrowing on illquid assets. So I hope all the all our sector and ecosystem will be extremely careful about the incoming wave of RWA. [Music] Cool. Um, thanks for sharing that. And maybe Casper, um, famous last words, but how would you think about an M&A process and the timing now? Um, if you were a crypto founder, um, like what would you watch? Is now still a good time to and and thanks for the pitch earlier to a point a cryptonative investment banking firm to have you start a process? Are we already too late? What should what should people watch really? And uh how would you think about timing? Yeah, we had that conversation with a lot of founders and uh we always give very honest advice and when we're talking to people the last couple of years have not been easy. I mean 22 was obviously disaster of a year and then 23 24 were very difficult to get M&A deals done because of this mismatch between buyers and sellers and just people couldn't raise cash on the one hand people didn't want to take their equity on the other hand because it was a liquid there's a valuation mismatch now uh you know as as Cole Martin mentioned earlier there's a kind of a meeting of the minds between buyers and sellers um we're getting deals done uh so with that preface I would say to any founder who's looking to sell like now is absolutely the time to start a process. If you wait like the market window concept is very real. Also in M&A I would say in a typical fouryear cycle you're probably within 18 months where you get 80% of the deals done. And we're in that window now. So unless you want to wait another 3 four years now is actually the time to start up a sales process. And there are certain subsectors where there's a lot of consolidation going on and there are still a relatively limited pool of buyers for some of the assets. So there is definitely an advantage in some of these sectors to be first out because it might be a bit of musical chairs where someone needs a you know company that does X and there's only five buyers but 10 assets and if you're you're kind of sitting around waiting there might just be no buyers left at at that point in time. So yeah, good time to start a process now. I wouldn't wait. That's a clear message. Time is now. Uh so let's get going. When any f final messages from your side uh to f founders and clients out there? Yeah, I think picking up on on on where where Casper just ended, be prepared. Um the some of the most successful processes we've seen over the last 12 to 18 months are because teams were ready to go whether it was on the M&A side or whether it was on the capital raising side and you can start that prep work today without going to market. But you know I see this all the time. I'm sure you guys see it all the time as well. We get phone calls from boards or founders who want to launch a process yesterday. The reality is there is a prep phase and it takes time and you want to go out with quality materials, a quality story, really understanding the market and so the time to start prepping is today. Um, look, the only other point that I'll mention is thinking about the fact that the IPO window is open opens new alternatives in terms of that in market consolidation. M&A isn't always an exit. And so increasingly we're speaking to players about mergers and merger of equal type transactions where we're looking at two parties who and in in one case three actually who who independently are not ready to go public are not of the scale to go public but together would be a serious candidate for an IPO that people would really pay attention to. And so I would say start having those conversations now. Start thinking about it now. Um these are really strategic decisions that shouldn't be made um on a whim. Uh absolutely. And I think also um maybe quick message to founders that are still considering going out or not. We hear a lot of I think reservations around okay ho how is an approach in the market uh going to be perceived by I don't know potentially competitors uh finding out potentially buyers clients um and I think key message is don't be shy I mean as Casper said there is a window right that window is as hot as it gets we're in definitely no regret territory and it's impossible to time the market is that holds true in I guess every aspect of life but certainly also on the M&A Right. And there is so much you can learn in you know broadly speaking corporate uh development process. Um a lot of actually interesting business conversations can come out of it. partnership conversations and simply also understanding a bit of where people that have a vested interest in your segment in your company would like to see the business grow where you know effectively having people shoot holes in your business is I guess um yeah um real value ad to I think any founder and and management team that is acceptable to that. So, you know, don't be shy. Um, if you're lucky to, I guess, work with someone on this panel, then I think you're already in good hands and, you know, let time and the market tell you, uh, where, you know, where you where you should grow the business and and also whether it's potentially better kept inside a large organization where, you know, the next phase of scale or growth could be achieved with a larger um with a with a larger partner. But with that, I think um, thanks so much to our panelists. It was an amazing discussion and yeah, let's see how long we have in terms of market and let's get a couple of deals done. Thanks for tuning in everyone. Thank you. Thank you all. Thank you.
Digital Dealflow M&A & IPO Activity in Crypto Markets DAS London 2025 Day 2 Investor
Summary
Transcript
Well, I guess let's get this session started. It's more timely than ever. We are deep in the M&A season, as people like to refer to. Um, we have an absolutely outstanding panel today to discuss M&A, IPO, and deal making more generally in crypto. So, let's kick it off with a brief uh introduction session. Alvin, kick it off. Hey, good afternoon everyone. Um, my name is Olwin Clark, co-head of investment banking at Galaxy Digital. Um, I will give you a longer background later on as we get into sort of how we got into this, but I'll keep it brief for now. Bonjour. I'm Lauren Ba. I'm the co-founder and CEO of MV Capital and uh, yeah been in crypto for a little bit too long perhaps. So since uh 2017 and I launched MV Capital which is could be seen as a vurator and uh liquid fund uh specific on a market neutral strategy uh within those last five years. We now manage a little bit more than $2 billion. The only specificity we have is that it's a fully on chain and uh following a market neutral approach and pleased to be here. Thank you for invitation. Hey everybody, Casper Johansson, co-founder of Spartan Group. We have an asset management business where we have uh liquid fund strategy, venture strategy, and market neutral strategy. Then we have an investment banking business which I run where we do M&A and capital markets. Uh and the M&A side and capital market side is what we'll be uh talking about today. Awesome. And my name is KL Martinand. I'm a co-founder at Arita. We're an investment banking firm exclusively focused on the crypto space. 15 people around the globe and founded in 2022. Um, X Blackstone and JP Morgan people. So guys, let's chat about M&A season. Um, everywhere I go, I talk about investment banking and it's like guys, you must be having a great year. Tell us how how has your year been, Elvin? Yeah, look, it's it's been busy. Um, in in the shortest in a sentence, uh, look, this year has been all about M&A. Um, if I look back over the last few years, there had been more focus on capital raising. It had been challenging to get deals done in terms of the bid ask spread and where investors minds were at in terms of confidence in the digital asset space, the crypto ecosystem more broadly. This year, we're seeing the stars align. And what does that mean? It means we're seeing founders and owners of businesses more interested in transacting um and more open to to coming to market. We're seeing regulatory shifts in the US and globally which is making the space more attractive for fintech and traditional financial institutions. And we're seeing more crypto businesses go public. And what does that mean? It means more businesses that are able to deliver liquid currency into deals. So fundamentally we're seeing a lot more M&A activity both in terms of um sellers who are interested in coming to market and buyers who are able to one deliver meaningful valuations and two deliver interesting uh transaction structures for sellers. So it it's been busy on our side but I'll hand over to others too to share their perspectives. Yeah. Oh, maybe before we ask Casper about his year, who in this room, quick show of hands, has been involved in a M&A transaction or IPO in in their career to level set. Okay, so we have a room of experts out of that group who has been involved in a crypto M&A transaction or IPO. Okay, so that's almost 100% uh we have a crypto M&A expert crew here. So let's go a bit deeper maybe. Casper, what do you think makes crypto M&A unique um even within let's say the more traditional M&A context and and yeah tell us a bit about the differentiating factors that you see in crypto deals why for example also is a advis is an advisor with crypto expertise uh better positioned to work on crypto deals or or what is needed really um when you take on the Spartan? Yeah, sure. So, I worked for a long time in traditional M&A at uh at Goldman Sachs where um you know we would have industry teams. I sat in the natural resources industry. I covered power in form of coal, gas, nuclear, renewables, chemicals upstream, downstream, midstream, oil and gas upstream, downstream, midstream, infrastructure. So obviously in each of those segments I was not an expert but I was running these billion-dollar M&A deals um and could kind of get by because these were like very late stage companies. The deals were $500 million and up. I think crypto is still because we're still quite early. I mean there have been up to three billion dollar kind of transaction sizes with a derbit deal but generally the deals are earlier stage companies um which requires more work from the adviser as part of the transaction to kind of just get the company ready and a deeper understanding of the industry. It's also um a lot of the companies have relatively young founders um who maybe this is like their first job or they haven't done that many other things and they're very passionate about crypto. So, I think to get a um a good outcome of a crypto M&A deal, you need three things. You need M&A product expertise, which you only get by doing it for 5, 10, 15, 20 years. It's not like a fundraising round. You can you can pitch to 100 investors, you have a good pitch, you're a strong founder, you can get it done on your own. Like, I think there's value to an adviser, but M&A transaction, I do not recommend a founder undertake that by themselves. The second is um you need a crypto network. You need a network of people that have an idea of who's a red acquirer for this asset. It's not like a fundraising round where you just hit a hundred names and just you know you have this funnel that you go through. It's much more bespoke. And then you also need an understanding and passion for the industry and the business so that you can position the the company right. Um, so just to make a a small plug on that point, I would say we're starting to see what I would call non-cryptonative advisory firms come into the space. So the three of us, um, Galaxy, Arena, and Spartan were all cryptonative. Uh, we're starting to see other like midsize banks come in, uh, and some fintech, uh, banks come in also, um, and take some some market share from us. But I I do think that from if if I'm a founder, I would want, you know, by all means, you know, have have people pitch for the the work and and then select your best adviser. But I think being cryptonative is very important to get a good outcome on an M&A deal. Yeah, I mean I I will pick up on that point because I would say it does not just apply to your M&A advisor. Um, something that we're very thoughtful about when we're working with our clients is making sure they have the right support across the transaction. Whether that is council, whether that is accounting, whether that is audit, um, you need the right people around the deal who understand a how to get deals done, but b understand the nuances of crypto and what that means for your transaction because what you don't want to be doing is paying people to learn. uh fundamentally you need people who are able to come and deliver meaningful advice and get a deal over the line for you. Yeah. And that's I I think even leaving aside the fact that we may see more and more deals actually involving tokens and uh having unique structures that obviously outside of crypto would have been unthinkable. And so yeah, there is a new paradigm I think evolving in the crypto M&A space which we're all very excited about driving. And yeah, I think we're seeing an early really early innings also on the onchain and and token M&A um spectrum. Lauron, how how have you seen this year really? Um also Xin investment banking background um you probably have a very nuanced view as well uh especially maybe around token M&A anything you see in the onchain world that you think is worth sharing? Yeah. um at the difference to my colleagues which are more on the M&A side and the early stage uh of any deals uh with MV Capital we will come more at the late stage. So once the project is live you you need a liquidity bootstrapper or vault curator to really like to to bootstrap to foster uh what my colleagues uh first invest in. Uh the year has been busy, not to take back your term, positively busy. Uh we saw of course more institutionalization not only uh in crypto but more specifically on the DeFi sector. Uh I remember like couple of years ago we were just between a a small scene of crypto bros as we used to say uh to now a more regulatory compliant uh sector that uh basically make a huge metamorphosis of what we were doing like three years two years ago. Now I see a real change of the industry that become way more institutionalized. Uh regarding the M&A like as a whole or token M&A if I may say this way. Well the the market is extremely f fragmented yet. Um but thanks to some like uh would it be Mika compliance rules or more clear uh genius act um uh regulation um it allows us to uh yeah to go to the next step on on on DeFi and it's true like I think those last those next six to eight months we will see a bridge between like traditional finance uh to more DeFi and I'm really happy to work with you guys to to help the the sector to to go this way. Awesome take and I mean we are obviously in the largest or hottest M&A window we've ever had in the industry but let's maybe discuss a bit and we haven't even talked about it between us but where do we stand in that cycle like are we seeing the top are we nearing the top um there is so many good conversations now happening which um at least in the history of Arita which has been basically one cycle uh we've been yeah I mean just amazed to see also the new interest coming in. Uh spent some time actually yesterday with buyside funds, mid-market PE funds now looking at crypto assets which is just an amazing uh dynamic to see and as as X Blackstone private equity professional uh obviously want to see more and more uh of our like-minded u financial investors come into the uh space and instit help institutionalizing what are already great businesses. Um what else what are the trends that you're seeing Casper? Um are there I don't know uh traditional buyers coming in uh what are the dynamics you're seeing on the ground that may lead to us thinking we're more advanced in the cycle and or or yeah just share a bit of your thinking on where we stand. Yeah sure. Um, we started Spartan in 2017, so I've been through a a few crypto cycles already and and um I'd say we're definitely at a very strong point in the cycle since uh or still this weekend this massive draw down that happened and bit of shock to the market. I didn't it's early days. I mean, it's only a couple days since that happened, but in in past cycles, I've seen something like that really jolt um M&A deals. um even though M&A deals should be long-term and strategic, they're actually very susceptible to market moves also. And this time around, I didn't really feel any of the buyers were on the sell side flinch. Um so that's very positive. Um at the same time to your point I am starting to see some more traditional buyers and not just like buyout funds but also strategics like if it's a data company maybe like traditional data company if it's a regulated exchange maybe you know more traditional fintech buyer poking around. Um and that to me is if you think of the market in cortiles is it typically comes from my experience in the third quartile of the market and then you got to get a deal done with them before you hit the middle end or the fourth quartile because those players will disappear immediately um if the market becomes a little bit um fragile. I love that answer. So we still have one quartile to go. Alvin, how are you capital? I'd say one and a half one and a half two. Okay. What do you think, Alvin? Um, look, if I could call the top, I'd be on a beach somewhere sipping my ties. Um, from if I'm completely honest, and I see some familiar faces who have heard me say that before. Um, I would say though that this is, you know, as people in the room who are thinking about undertaking strategic M&A, and that's the word that Casper used there, strategy and strategic thinking is the right way to think about this. From a seller perspective, um, of course in the moment within a particular process, you want to, uh, obtain the best deal possible, but there are multiple different ways to construct the right deal. And that doesn't just necessarily mean top ticking the headline valuation. Um, it might mean how do you get the right amount of liquidity up front. It might mean how do you make sure that you participate in the equity upside for the long term. It might mean how do you make sure that you are able to if you're thinking about moving on to do something new able to exit the business within the right time frame that is appropriate to you and so there are there are a number of different factors that I would be thinking about as a seller from a buyer's perspective you know again to Casper's point I think there are some some buyers out there particularly the non-cryptonative ones who worry about are they about to to buy at the top of the market. But really, this is about the the real strategic buyers understand that this is a long-term uh strategic investment. And this is not about generating return in two years or three years or 5 years. It's about positioning your business for the next 10 years or 20 years or 30 years. And those are the buyers who have conviction. Those are the buyers who don't flinch when they see a small draw down over the weekend. Um small um and and that's what we're bringing together. And I think today in the market we are seeing a much larger pool of high conviction strategic buyers who are able to deliver value. And we're also seeing founders and management teams take a more strategic view around where does their business end up and what does that mean for the long-term value creation for them? Any interesting or particular verticals you're thinking about? I think to today we're seeing a lot of focus on on anything that you could loosely term infrastructure. Um, and so that has different meanings to different players in the space. For some players in the space, infrastructure means being able to offer non-custodial wallets. For some players, infrastructure means being able to offer spot trading. For some, it means derivatives trading. For some, it means staking and yield on chain. Um, but they all wrap it in this language of infrastructure. And I think that's important because it tells you where people's heads are at, which is that they are thinking about how do I build a platform that I can continue to build on going forward. What are the building blocks that I need to have a long-term position in the market as opposed to what is a product that I can monetize over the next 12 months. On the point of yields on chain, no, what is there to see currently that would let us conclude on where we're trending? Any specific dynamics you've been seeing lately, whether that's with LPS, on your strategies, on you know, money movements that you find noteworthy. Um, I don't know. I would like to coin like low-risk DeFi may may may occure now like we have been doing DeFi for those last three four years professionally. Now for example the last uh partnership uh I succeeded to to call in is with a French bank called associate general corporate investment banking. uh this bank now ask uh liquid fund uh such as and curator such as MV Capital to originate and distribute Euro stable coin. Sorry, I'm pro- European. I would like Europe to have their own Euro stable coin. So, please let us try at least. Um and then yeah like yesterday it was a foundation or Ethereum ICO participant that used that used to be and still are our LP today is multinational banks that uh try to originate and foster um um AWA or stable coin within the ecosystem. So to me it shows the color of what will be um defy within the next uh decades. Uh I thought defy would have turned permission defy or some say per um corporate chain defy but with associate general we just realized that uh this bank which is the second biggest one in in France is distributing their products on a public chain without any like uh permissioned uh barrier. Uh so I'm still I'm extremely positive uh to where DeFi is going. It's just that uh it will change the APR will change the cons the the the degree of conservativeness if it's a word will change. Um I think uh next client will be become way more risk averse. So it's uh also the work of uh of Spartan and of Emily Capital to propose what we call the riskadjusted deal. Yeah. And to get back on your point what happened this weekend, I would like to highlight that uh uh CX we saw again the limit of centralized exchange while on defy liquidation went well. No bad depth has been reported. unis swap and other protocol um didn't went off. It was still working every minutes. So I hope you you appreciated the I hope you appreciated the the yeah the resilience of D5 during those kind of black swan. Uh so I think uh DeFi has been a little bit undervalued for what it was and again this weekend um yeah we show the resilience of of DeFi compared to CX. Yeah definitely a highlight in uh what otherwise I guess was a yeah more dramatic or or a negative weekend for all of us here. Um, another highlight I want to say over the last 3 to 6 months was obviously the wave of IPOs, you know, driven by the largest U US conglomerates, exchanges. I know Casper, you followed them uh pretty closely. Share a bit of context or set the scene for the IPO landscape uh currently and then we can talk a bit about what's to come next and and uh what that actually does to you know our work also more on the M&A side. Yeah. Okay. So we we should definitely talk about that because IPO has a massive downstream effect on the M&A market. But in terms of the IPO market overall, um obviously it was kicked off with a circle IPO that went um above all expectations and is still trading at um you know a good level compared to um the IPO level for for a long time. you know, probably since 22, there was a pretty active and liquid secondary market in shares of Kraken, Circle, not so much Gemini, but some bullish um and a bunch of the other companies that are kind of scheduled for IPO now where they were trading hands at very attractive valuation. our fund picked up some of those too like early employees selling you know funds that just needed some some liquidity um because there just was no outlook to getting any liquidity in these shares so people are happy to sell at you know 70% discount to the latest round um so now with with the circle IPO happening which is um also very much a regulatory political thing in terms of just the SEC being willing to sign off on the these IPOs so the the political situation. The US definitely has played a massive role in that. Um and then you know I still think we saw circle uh we saw figure markets we saw Gemini um bullish and I I it's still a relatively fragile market from the perspective of there's not still not that many comps out there. So, I'm kind of holding my breath every time a new one goes out because if one of them doesn't go well, it it it will impact the next one in in the queue. We're not at the point where there's 20 of them and if one goes bad, you could say you could point to that one and say, "Oh, there's specific reasons why that went poorly, but the next one will be fine. I think we still relatively fragile, but it's just it's great to see the market opening up." Totally. And I mean more IPOs means we get more quarterly reports uh more eyeballs from Wall Street and I think it just makes the space a lot more institutional and the the crowd of uh or basically the people looking at the space just shifts over shifts over time right and I think that's a um yeah a huge indirect benefit to to everything we do on the dealm side how do you think it affects uh your business also obviously one of the largest EU conglomerates Yeah, fundamentally um it's it's good for for M&A. Um as Casper says, I think having having public comps is helpful. It helps that particularly the non-cryptonative players who are looking at the space think about valuation and what makes sense and compare business models as they get a bit more transparency in a format to your point um that Carl that that they can understand and digest. Um it also helps more broadly, right? because I think we've been in a period for the last few years where the exit options for investors in crypto businesses were were relatively thin because the M&A market was challenging um and the IPO market was closed. Uh since we've had the new administration come in in the US, an IPO is now a viable exit. And that's very powerful because what does it mean from specifically an M&A perspective? It means you have a tool in your you have access to a tool that we didn't have access to before which is the dual track process and this is where you know you can bring in an independent financial adviser like the players up here who who know how to run an M&A process but also know how to prepare for an IPO process and that allows you when you're going to market and thinking about M&A options to have uh another another option another lever that you can pull in terms of bringing competitive tension to that process and that's always powerful. Um, in terms of thinking about executing that, you know, from a seller's perspective, there is a lot of overlap between the materials you need for an IPO and the materials that you would use for a sale process. Um, and with the right team around it, you can manage that very efficiently and very effectively. So, net net fundamentally, more IPOs is is very good for the space. It helps with M&A momentum. It helps deals get over the line. It helps with pricing deals. And for sellers in market, it materially helps with them in terms of thinking about their opportunities and how they want to exit the business. Totally. And I mean, it just I guess increases the amount of viable buyside candidates we have in the space. I mean now having I mean billions of liquid equity and stock is something I mean it's a huge development of 2025 and it's something that we all didn't have access to also when working through our site M&A mandates. Um and I think what's maybe useful also for the um audience to understand is that people that are in the queue for an IPO process they typically stop looking at M&A 6 months 12 months um before the IPO because too many things could go wrong. you need to get the accounting right. Uh integrating an acquisition while basically the entire firm is just looking forward to that IPO is just something something incredibly tricky to do. So um all these guys getting through the queue now um is actually just I think spilling oil into the fire of uh larger M&A transactions and so quite keen to see these guys now coming back to the buy side and and getting very active. Uh it's needed for their public story. um they have a lot of uh liquid stock to to to now also do uh interesting acquisitions and you know in public markets um story sometimes is as important as as the execution and so viable M&A strategy and and uh showing the market that you are able to integrate uh businesses and and look forward and do acquisitions is I think something that we'll see uh a lot from the ones that have already gone public and then I guess even more so uh from the ones that are yet to come. Um maybe now uh we're uh just shy about 10 minutes left. Lauron, tell us what you're looking forward to also on the onchain space now. Um a brief outlook. What uh what are you watching? Um have the audience understand from uh also the American yield perspective? Uh what are the interesting trends to follow? Anything to spot uh when when thinking about the next couple of months and quarters? I think it's uh the CEO of Black Rockck that say that there is a trillion of dollar of token tokenized asset that will come on the market within the the next decade. So I agree with him. Um however those last six months I think we refused around 60 RWA projects. uh DeFi is not the bean for like low rated uh credit risk uh assets. Uh RWA will be there. AWA will be the next big thing. LWA is almost infinite can tokenize anything from fig to real estate to export finance to go depth to corporate depths to credit cards loans to anything. uh but it's also comes with all the risk because actually the the the probability of default the probability of recovery is totally independent from uh defy so this bridge between the real world assets which I see in bank uh well we call it risk weighted assets so that's why the acronym is a little bit weird but so the bridge between LWA and and onchain is is is absolutely another world uh now I I think every D5 fund uh will need to have their own uh credit risk analyst. Uh the risk of counterparty of a smart contract is not the same of a risk of counterparty of a collapse of of any underlying asset. So let's be careful this time about RWA. We tried I think back in 2022 it's totally failed. Uh maybe this time will be different if I may say. uh it will come but we have to be extremely careful not to mix again uh onchain with offchain but the bridge is there the bridge the bridge is there so it's not if but it's when so LWA uh narrative um is something to to look at stable coin narrative I know you already heard it like million times but it's coming it's not just on the news every banks these days wants to have their own stable coin. Would it be to I don't know sell their repo or sell their banking activity uh through their own stable coin but again defy is not the bean to do recursive borrowing on illquid assets. So I hope all the all our sector and ecosystem will be extremely careful about the incoming wave of RWA. [Music] Cool. Um, thanks for sharing that. And maybe Casper, um, famous last words, but how would you think about an M&A process and the timing now? Um, if you were a crypto founder, um, like what would you watch? Is now still a good time to and and thanks for the pitch earlier to a point a cryptonative investment banking firm to have you start a process? Are we already too late? What should what should people watch really? And uh how would you think about timing? Yeah, we had that conversation with a lot of founders and uh we always give very honest advice and when we're talking to people the last couple of years have not been easy. I mean 22 was obviously disaster of a year and then 23 24 were very difficult to get M&A deals done because of this mismatch between buyers and sellers and just people couldn't raise cash on the one hand people didn't want to take their equity on the other hand because it was a liquid there's a valuation mismatch now uh you know as as Cole Martin mentioned earlier there's a kind of a meeting of the minds between buyers and sellers um we're getting deals done uh so with that preface I would say to any founder who's looking to sell like now is absolutely the time to start a process. If you wait like the market window concept is very real. Also in M&A I would say in a typical fouryear cycle you're probably within 18 months where you get 80% of the deals done. And we're in that window now. So unless you want to wait another 3 four years now is actually the time to start up a sales process. And there are certain subsectors where there's a lot of consolidation going on and there are still a relatively limited pool of buyers for some of the assets. So there is definitely an advantage in some of these sectors to be first out because it might be a bit of musical chairs where someone needs a you know company that does X and there's only five buyers but 10 assets and if you're you're kind of sitting around waiting there might just be no buyers left at at that point in time. So yeah, good time to start a process now. I wouldn't wait. That's a clear message. Time is now. Uh so let's get going. When any f final messages from your side uh to f founders and clients out there? Yeah, I think picking up on on on where where Casper just ended, be prepared. Um the some of the most successful processes we've seen over the last 12 to 18 months are because teams were ready to go whether it was on the M&A side or whether it was on the capital raising side and you can start that prep work today without going to market. But you know I see this all the time. I'm sure you guys see it all the time as well. We get phone calls from boards or founders who want to launch a process yesterday. The reality is there is a prep phase and it takes time and you want to go out with quality materials, a quality story, really understanding the market and so the time to start prepping is today. Um, look, the only other point that I'll mention is thinking about the fact that the IPO window is open opens new alternatives in terms of that in market consolidation. M&A isn't always an exit. And so increasingly we're speaking to players about mergers and merger of equal type transactions where we're looking at two parties who and in in one case three actually who who independently are not ready to go public are not of the scale to go public but together would be a serious candidate for an IPO that people would really pay attention to. And so I would say start having those conversations now. Start thinking about it now. Um these are really strategic decisions that shouldn't be made um on a whim. Uh absolutely. And I think also um maybe quick message to founders that are still considering going out or not. We hear a lot of I think reservations around okay ho how is an approach in the market uh going to be perceived by I don't know potentially competitors uh finding out potentially buyers clients um and I think key message is don't be shy I mean as Casper said there is a window right that window is as hot as it gets we're in definitely no regret territory and it's impossible to time the market is that holds true in I guess every aspect of life but certainly also on the M&A Right. And there is so much you can learn in you know broadly speaking corporate uh development process. Um a lot of actually interesting business conversations can come out of it. partnership conversations and simply also understanding a bit of where people that have a vested interest in your segment in your company would like to see the business grow where you know effectively having people shoot holes in your business is I guess um yeah um real value ad to I think any founder and and management team that is acceptable to that. So, you know, don't be shy. Um, if you're lucky to, I guess, work with someone on this panel, then I think you're already in good hands and, you know, let time and the market tell you, uh, where, you know, where you where you should grow the business and and also whether it's potentially better kept inside a large organization where, you know, the next phase of scale or growth could be achieved with a larger um with a with a larger partner. But with that, I think um, thanks so much to our panelists. It was an amazing discussion and yeah, let's see how long we have in terms of market and let's get a couple of deals done. Thanks for tuning in everyone. Thank you. Thank you all. Thank you.