What's the deal? The Tech M&A & Fundraising Newsletter - The Dual-Track Strategy
Welcome to the inaugural issue of What’s the Deal? - your monthly snapshot of data, insights and trends shaping the startup/scaleup tech ecosystem. Designed with founders, Board members, and VCs in mind, we’re here to deliver actionable perspectives and strategies on M&A and fundraising, with a focus on Series A to Series C stages.
A note from the Editor - CEO Claire Trachet
As we kick off the new year, the sector presents a mixed bag of opportunities and challenges. M&A activity is slowly on the rise following 2 very quiet years offering a lifeline for some and strategic consolidation for others. Yet, the fundraising landscape remains volatile - leaving the question - what does it take to navigate a deal successfully in 2025?
The uncertainty experienced in 2024 feels anything but resolved. The challenges of last year - particularly in Europe - highlighted a widening gap in the startup ecosystem. While headline-grabbing blockbuster deals propped up deal value, the underlying reality of lower deal volume paints a stark picture for many Series A to Series C founders.
This consolidation signals a shift toward a world where a few big players dominate, leaving limited opportunities for others to break through. In the U.S., unexpected political and economic turbulence has added further complexity, with markets reacting sharply to every development. Founders must prepare for a year that is likely to be anything but relaxed - where opportunities will be scarce and adaptability is critical."
In this context, we chose to start our monthly newsletter with a focus on “dual-track strategy” - as we view it no longer as a luxury but rather as a key tool which will significantly improve the odds for every business considering a fundraising or exit in 2025.
Deep-dive of the month: The Dual-Track Strategy
The premise is simple yet very logical: in a world of uncertainty, why close doors? Even with promising fundraising/M&A conversations, keeping an alternative track open creates additional leverage and protects against last-minute disruptions.
Think of dual-track as a spectrum - basically anything in-between “exclusively” considering fundraising or M&A. This strategy is about being opportunistic and creating momentum. The wider the door is open, the more chances to position yourself for success, reducing your dependency on the market environment. It’s a fine balance of maximising your opportunities without losing focus. In 2025, we believe adaptability and strategic optionality will allow for your company to hold the reins on its growth journey.
Dual-Track is a spectrum in-between exclusively considering Fundraising or M&A
Dual-Track end-to-end
It all starts with introspection, which will define what the right decision is for your business. Asking the right questions is critical - here is an illustrative sample:
Does the Board have a preferred outcome? (e.g. a targeted timeline? minimum valuation?)
Is there a consensus towards M&A or fundraising?
What is the current structure of the Cap Table? How is the ESOP plan?
What are the topics expected to be raised in due diligence given your company Tech/history/industry? How ready are you as a team to successfully tackle these points?
Would an M&A impact your client contracts?
This should be followed up by exploring interest and « trigger milestones» for potentially interested parties. The Board can get a sense of market appetite and form their opinion to approve formal discussions to be held. Discussions held with buyers/investors from broader horizons means more potential to build a momentum, with the goal of stirring the discussions towards the actual value to that buyer/investor (« value-based » valuation) and away from the simple application of the financial multiples of the moment (where your valuation is dependent mostly on factors outside your control such as the economic environment or the current investment market cycle). The better the preparation in Phase 1, the more strategic one can be in this Phase 2 of discussions - thus increasing the chances to reach a satisfactory proposal (« Term Sheet » for investment and « Letter of Interest - LOI » for M&A » - each being similar in describing the headline terms of the proposed transaction).
In most cases, these offers will request exclusivity. The management of the communication with the parties not selected will be essential - there’s no deal until signed (actually, closed!) - a skillful management of these parties can help regain momentum if Phase 3 shows signs of dragging. As founder/Board member, the goal during this Phase 3 is to successfully close it as fast as possible - « successfully » meaning not getting the price chipped down during the due diligence. Once again, the preparation at Phase 1 will be very important in both the speed and the level of success in the due diligence - the aim is to lead the conversations rather than be playing defense. While this Phase 3 typically moves to a « single track » due to the exclusivity requested in most Term Sheets, the dual-track approach will continue to support your bargaining position all the way until the closing of the M&A/investment.
The steps of a Dual-Track plan during the transaction process
Monthly news roundup
Trachet in the news
→ Bloomberg: IPO market, secondary listings and the M&A market (minute 26:18)
CEO Claire Trachet presents Trachet’s views of the UK and European market trends.
Claire Trachet on Bloomberg: Daybreak Europe
→ The Times: What I learnt … about getting the best price for your company
Claire Trachet advises tech company founders looking for new investment or a sale to do their homework, know the numbers and be kind to themselves
→ Forbes: The Tricky Series C: How Startups Can Boost Their Funding Chances
A bit older however still very relevant for 2025: Claire Trachet talks about the series of issues that impacted the tech ecosystem in 2024; her recommendations to navigate these & successfully close a deal.
What we've been reading
→ Startup Funding Regained Its Footing In 2024 As AI Became The Star Of The Show - Crunchbase
Crunchbase’s detailed startup funding overview for 2024 - reaching close to US $314bn and up 3% vs 2023 mostly supported by Series A & B’s growth in H1 2024.
→ What start-ups taught me about ambition this year - City A.M.
This Ambition AM article is an ode to entrepreneur’s ambition - the key to making things happen. A refreshing and uplifting read in-between more heavy news.
→ M&A in European Tech: A Slow Burn to Recovery - Sifted
Despite European tech M&A slowing down in 2024, this article presents the arguments backing the expected rebound in 2025.
→ Can Europe build its first trillion dollar company? - Financial Times
As Trump is about to be sworn in this Jan-25, this thought-provoking article is a great place to explore how the continent lost its lead and what could be done about it..
→ Investment Trends to Watch in 2025 - FT Adviser
What’s on the mind of the investors (and their investors - the LPs!) for 2025 & what this means for startups: inflation, tariffs, China, ESG, Gold… and volatility.
We’re keen to hear about the key challenges (or opportunities!) shaping your company’s objectives in 2025. Email us at claire@trachet.co for more information on topics you'd like to see discussed in future issues of What’s the deal?