tl;dr
In a recent earnings call, MicroStrategy's Michael Saylor stated the company has no immediate plans for mergers and acquisitions (M&A) in the Bitcoin treasury sector, despite growing competition. While highlighting risks like market uncertainty and long M&A timelines, Saylor contrasted this with Str...
**MicroStrategy's Saylor Shuns Bitcoin Treasury M&A, Citing Uncertainty**
In a recent earnings call, Michael Saylor, chairman of MicroStrategy, emphasized that the company has no immediate plans to pursue mergers and acquisitions (M&A) in the Bitcoin treasury sector, despite the growing competitive landscape. While acknowledging that such deals could potentially be “accretive,” Saylor highlighted the challenges of navigating the uncertain and evolving market.
“Generally, we don’t have any plans to pursue M&A activity, even if it would look to be potentially accretive,” Saylor told investors during the third-quarter earnings call. He noted that M&A processes often stretch for six to nine months or even a year, warning that ideas that seem promising at the outset may lose their appeal over time.
The Bitcoin treasury sector, which involves companies holding Bitcoin as a corporate asset, has seen increased competition as more players enter the space. Analysts have speculated that consolidation may become necessary for firms to differentiate themselves. However, MicroStrategy appears to be taking a cautious approach.
**A Contrasting Example: Strive’s First Bitcoin Treasury Merger**
While MicroStrategy avoids M&A, Strive, another Bitcoin treasury company, made headlines in late September by acquiring its rival, Semler Scientific, in an all-stock deal. The merger combined Strive’s holdings with Semler’s, resulting in a combined portfolio of 11,006 BTC. This move placed Strive among the top 12 public companies by Bitcoin holdings, though it pales in comparison to MicroStrategy’s 640,808 BTC—a record in the sector.
Despite Strive’s bold move, Saylor suggested that such transactions are not without risks. MicroStrategy CEO Phong Le echoed this sentiment, stating that M&A in software companies—MicroStrategy’s core business—is “very difficult” due to hidden complexities. He applied the same caution to Bitcoin treasury acquisitions, noting that “there’s always something hiding behind what you actually think you purchase.”
**A Transparent Business Model**
MicroStrategy’s focus on Bitcoin has allowed it to maintain a clear, predictable business model, which Saylor argues gives it a competitive edge. By prioritizing digital credit sales, Bitcoin purchases, and transparency, the company enables investors to easily assess its financial performance.
“Our focus is to do high-speed transparent digital transactions and sell digital credit and buy Bitcoin,” Saylor said. He emphasized that this model’s clarity is a key advantage, making it easier for analysts to evaluate the company’s value.
**Credit Rating Challenges**
Despite its Bitcoin holdings, MicroStrategy’s credit rating from S&P Global Ratings remains speculative, with a “B-” grade—placing it in the non-investment-grade category. The rating agency did not factor Bitcoin holdings into the assessment, deducting them from the company’s equity.
Le acknowledged that improving the rating would require a shift in how Bitcoin is viewed. “It would be appropriate at some point in time that Bitcoin be treated differently, and as a capital asset,” he said.
**No Definitive No on M&A**
While Saylor ruled out immediate M&A activity, he stopped short of saying the company would never consider it. “I don’t think we would ever say ‘we would never, never, never, ever,’ but what we would say is the plan, the strategy, the focus is to sell digital credit, improve the balance sheet, buy Bitcoin and communicate that to the credit and the equity investors,” he noted.
As the Bitcoin treasury sector continues to evolve, MicroStrategy’s strategy of focusing on transparency and organic growth contrasts with the consolidation efforts of some peers. Whether the company will revisit M&A in the future remains to be seen, but for now, its leaders are doubling down on their current approach.