What OpenAI’s $6.5B deal tells us about today’s strategic M&A market
Despite headlines focused on IPO speculation and public market conditions, the vast majority of meaningful exits are occurring through M&A, and at consistently strong valuations. According to Victor Basta, Managing Partner at Artis Partners, there needs to be a “hard reset” in how companies and investors think about liquidity.
“With the gyrations in public markets, many are obsessed with IPOs and whether that window is open or closed, but it actually doesn’t matter very much,” said Basta. “For the vast majority of successful exits, strategic M&A is how they happen — consistently 80 to 90% of all successful exits, in fact. And of those, two-thirds are now strategic deals versus sales to Private Equity, compared to less than 50% two years ago.”
This strategic skew is where value is concentrating. Recent headline deals validate the trend, not just with mid-size M&A but large, transformational acquisitions: OpenAI’s acquisition of io — co-founded by former Apple design chief Jony Ive, who is now taking on creative and design leadership across the merged businesses — reportedly valued the two-year-old, 55-person company at over $6.5 billion. “That’s a pure strategic deal,” said Basta.
“While OpenAI already owned a quarter of the company, the value wasn’t about ownership; it was about gaining complete strategic leverage for OpenAI to penetrate a new market segment — devices — that can multiply its valuation if successful.”
Microsoft’s transaction with Inflection, based in the UK, was largely to bring former DeepMind applied AI lead Mustafa Suleyman and his team into the company and followed a similar pattern. “They acquired the core of Inflection to enhance and de-risk their AI strategy beyond their OpenAI relationship. These types of deals for entirely strategic assets are achieving valuations completely unrelated to target size or performance,” said Basta.
It’s not just happening in AI. Artis’ internal analysis of recent fintech transactions, particularly in payments, reveals valuations as high as 120x the target’s revenue, and M&A deals consistently achieve 10x revenue or more versus public fintech valuations which are generally below 10x. In fact, according to recent fintech sector analysis, public fintech firms traded at an average of 8.8x revenue in 2024, while M&A transactions averaged 14.4x.
“Some of this disparity is due to size; multiples of revenue are often higher when a target is smaller and growing more quickly, but that also means buyers are willing to pay for tomorrow’s performance — a fundamental feature of today’s strategic M&A market,” added Basta.
He continued: “Deals with companies like Jony Ive’s change their industry fundamentally but only get noticed for a day and then people move on. But whether or not Chime can go public becomes a never-ending obsession even though there is no reshaping, and very little liquidity for shareholders in an IPO. The exits which matter the most are getting the least attention, perversely.”
Basta concluded: “These are not one-offs. Strategic buyers are consistently paying prices that would have been considered remarkable even a year ago. It’s time the market’s attention started focusing on where value is actually being realised.”