Atlassian-Loom Discount Deal Suggests M&A Market is Reviving

The brief revival of the IPO market may be petering out, thanks to a spate of disappointing offerings lately. But the M&A market, at least for enterprise software firms, seems to be coming to life—even if the valuations are a little painful for sellers. On Thursday, for instance, Atlassian said it would swallow up video messaging firm Loom for $975 million, 36% below Loom’s most recent valuation of $1.5 billion, set in 2021 when it last raised venture funding, according to PitchBook. Among those burned are Sequoia, Andreessen Horowitz, Kleiner Perkins and Coatue, all of which participated in the 2021 round.

Loom’s willingness to sell suggests that investors have moved on from 2021 peak valuations (unlike pesky reporters, who tend to love pointing out how much valuations have dropped). Presumably investors are more concerned about the health of the company. With fundraising still not quite as easy as it once was—unless you’re an AI startup—and the IPO market still weak, selling is likely the best option. We don’t know whether Loom was profitable or how much cash it had left. It’s notable that, according to PitchBook, the last time Loom raised money was when it borrowed $40 million from Silicon Valley Bank in mid-January.