What key takeaways from this transaction could benefit other Web3 firms considering M&A activities? Firstly, it is important to ensure that your house is fully in order before starting to consider M&A activities. Contrary to popular belief, Web3 has in many ways become a very regulated industry, and we are seeing a trend of increasing regulation over the next few years. In this respect, we are now seeing firms asking for legal and compliance audits ahead of potential transactions, in order to reduce the number of red flags that arise during the transaction, and consequently to ensure that optimal pricing on the transaction is achieved. Furthermore, as the Web3 ecosystem is still relatively nascent, it is important to work with the correct advisors. In this respect, for example, Galaxy Digital Partners are one of very few financial advisors that specifically work in, and therefore understand, Web3. More generally, given the complex nature of the businesses involved in Web3, the ability to be flexible and compromise is key. In this respect, in my experience founders generally have a core vision for their business and will not want to see that tarnished in a transaction. The cultural alignment of Bitwise and Attestant was a core driver behind the success of this transaction, as both sides understood the benefit in terms of Bitwise acting as a launchpad to the Attestant business reaching a truly global audience whilst in no way compromising on the quality associated with the product. In fact, it was amazing to see the positive response by the Web3 community more generally to the transaction, as it was seen as a step towards creating a more mature industry. Another interesting take away from the transaction was the fact that it underlined the importance attributed to the skill of the individuals involved. A key motivator for the transaction was not simply to obtain Attestant’s technology and client base, but also the team behind them. Indeed, within a few weeks of the transaction, the Attestant team is helping Bitwise launch a range of new products, as part of its Onchain Solutions product range, allowing Bitwise clients to stake on new chains such as Starknet. We are seeing this as part of a broader trend within Web3, as there is a significant premium on getting the right team involved in a project – as using a substandard team can cause real loss to an enterprise, for example, because of a greater risk of being hacked. This has created an interesting shift in the dynamic when negotiating transactions, as there is a much greater focus on ensuring that the teams are in a position to work cohesively together post transaction, rather than simply looking for a short-term gain. This means that successful transactions are not necessarily simply about aggressively seeking to negotiate on price, rather there is a need to consider the sensitivities of the particular individuals involved to ensure that, postacquisition, the talent, and the value that brings, is properly incentivized to stay with the business. Lastly, we would note that the transaction was greatly helped by the professionalization of all those involved. The rapidly evolving nature of Web3 means that an in-depth understanding of how it works is mandatory in order to be able to give proper advice on a transaction. This is only likely to become even more important - we are seeing that as we work with new sui generis constructs such as DAOs, this raises fresh new questions that only those who live and breath the industry will be able to solve. For more information regarding WAGMI Advisers gunnercooke, please see: https://wagmiadvisers.xyz/ TRANSACTION INTERVIEW 55
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