Pilot Phase: M&A for Arbitrum DAO

Non-constitutional

Please review the forum post for full proposal details: https://forum.arbitrum.foundation/t/pilot-phase-m-a-for-arbitrum-dao/23588

Abstract

The 8-weeks M&A pilot phase proposal is the next step toward the Arbitrum M&A proposal outlining the opportunity for Arbitrum DAO to form an M&A Unit focused on identifying and executing on acquisition opportunities.

The overarching aim is to utilize M&A as a key growth driver for the Arbitrum ecosystem and to help the DAO expand non-organically through acquisition opportunities that are not accessible to competing ecosystems, thereby critically enhancing Arbitrum DAO's capital allocation methods.

Full details on the M&A proposal, its operational processes and structure you can find in the Arbitrum M&A Core Proposal

Motivation

The 8-week pilot phase is designed to provide the DAO with sufficient information to make an informed go/no-go decision regarding the further operationalization of the M&A unit and its funding requirements. It is the natural progression of a 6 weeks Working Group sprint to develop an initial structure of the M&A unit.

In addition to conducting an in-depth strategy study on the value upside of M&A, analyzing strategic target areas, aligning them with key stakeholders (both online and at the GovHack in Brussels), and providing exemplary analyses on targets, the pilot phase should serve as a facilitated platform for in-depth discussions based on data rather than opinions.

Rationale

The dedicated goals of the pilot phase are the following:

1. Equip the DAO with sufficient knowledge to make an informed decision about the operationalization of the fund.
2. Align the DAO on strategic target areas by providing strategic analysis and coordinating key delegates and stakeholders.
3. Provide an orchestrated platform for discussion of the efforts over an extended period of time to further sharpen the edges.

Specifications

The initiative will be led by a dedicated team from Areta - the leading independent crypto-native investment bank specializing in M&A and complex financial transactions for some of the leading ecosystems in the crypto space with deep M&A transaction expertise and involvement in Arbitrum DAO.

Steps to Implement

The insights from the analyses will be condensed into an assessment report to be presented to the DAO. Further, the GovHack at EthCC will be used for status update and facilitation of a working session. The insights from the analyses will be condensed into an assessment report to be presented to the DAO, incl.:

1. Analysis of M&A value upside for Arbitrum DAO

• Arbitrum M&A value upside analysis, incl. benchmarking for the DAO
• Assessment of tactical importance of M&A for the DAO, incl. activities that M&A will enable the DAO to engage in
• Impact analyses of determined target areas

2. Development of strategic areas for Arbitrum DAO supported by in-depth analyses, incl. alignment of target areas with key stakeholders in the DAO

• In-depth strategic analyses of target areas, incl. financial and strategic upside to the Arbitrum ecosystem
• Facilitating interactions across the DAO to present results of analyses and align stakeholders. Key part of these will be held at the GovHack in EthCC.

3. Analyses of target examples and presentation to the DAO

• Exemplary target identification on one target area to provide the DAO with a better understanding of what it would mean to have the M&A Mgmt Unit operate
• Target analysis and example of outside-in due diligence process
• Integration options per target in context of Arbitrum DAO

Timeline

The pilot phase (as detailed in the proposal) will entail an 8-week sprint structured into 3 work packages and underlying deliverables detailed out above.

Overall Cost

Overall cost for the 8-weeks pilot phase will be $52k ARB, consisting of:

• Operational budget: Minimal budget to cover cost for a lean team conducting the execution of outlined work packages: $25k ARB / month
• Access to Data Providers/Research Platforms: $2k in ARB (remaining budget to be refunded to the DAO)

Receiving wallet address: 0xd5c4E8dd598205045f406DC81b9e01E91005C912

Safe MSig with 3 signers: Bernard Schmid (0x8F7A73A6e96fAb2C970bC4b76d236c3dCCD6e7Da); Karl-Martin (0xC6Dc0805c3e7cF1667f80F46bd9D5b1443280dBF); Jan-Philip Grabs (0x39B91ede1F2e7524207cDFB6823Be2a4f9B94012)

Helpful links:

• M&A Core Proposal: here
• M&A Working Group Progress: here
• M&A Telegram Group: here
• Easy-to-digest Video Summary (s/o to Sinkas): here

Key Terms

Definitions of any terms within the proposal that are unique to the proposal, new to the Arbitrum community, and/or industry-specific. This section is optional, but recommended.

Mergers & Acquisitions (M&A)

Mergers and Acquisitions (M&A) involve the process of combining two companies into one or one company taking ownership of another. These transactions aim to create a more efficient and effective entity by leveraging synergies

Target

A target in M&A refers to the company that is being pursued for acquisition by another company, known as the acquirer. The acquisition typically results in a change of control of the target company, transferring ownership to the acquiring company.

Special thanks to @jacobpphillips and @hiringdevs.eth for sparking the initiative at the GovHack in Denver, and the WG members for their continuous support.