November 24th – November 30th
PERSPECTIVES by Eric F. Risley
M&A is driven by corporate strategy, but creativity can be critical as well.
Exodus, the publicly traded non-custodial wallet provider, has demonstrated its strategy of broadening its value proposition to include crypto payments for goods and services through the acquisition of Baanx and Monavate announced this week.
This transaction is a great case study with three particularly notable elements. First, this transaction is very meaningful from a size perspective for Exodus, representing 48% of the combined enterprise value just prior to announcement. This scenario is closely scrutinized and “voted on” by the market. In this instance, Exodus stock traded up in the aftermarket following the announcement, opening up 5%, which indicated a positive market reaction to the acquisition. Within two days, the stock had increased 17%.
The second notable element is that Exodus provided pre-close funding of between $58.8M and $68.8M, which is very unusual. This demonstrates how creative structuring can be integrated into M&A transactions to allow for unique requirements.
Lastly, Exodus funded this all-cash acquisition with a loan secured by Bitcoin it owns, raising cash without selling the Bitcoin at values well below recent highs.
A more detailed description and assessment can be found in our M&A Alert.
