We knew the IPO market was bad for venture capital-backed startups, but it seems the M&A market isn’t getting any easier for them either. At least that’s what Paul Deninger, an investment banker at Jefferies & Co, said at a technology summit at Stanford University.

“The M&A market is going to get tougher,” Deninger warned. “We’ve got to repopulate the buyer base. You can count on one hand the buyers.” He named the usual suspects – IBM, Cisco, Microsoft, Hewlett-Packard – and other big companies that have tons of cash and are always on the lookout for a good buy. But after all, there are only so many startups these tech giants are interested in or have the ability to buy. “That can’t last forever.”

What’s worse, the competition among those trying to sell companies is only going to get tougher, Deninger said. That’s because venture capitalists are increasingly investing in companies that will be “good M&A opportunities, rather than pursuing big ideas that could become standalone IPO companies,” paving the way for an eventual glut of M&A candidates. That’s not surprising given the current market environment, where not a single venture-backed company went public in the second quarter.

But some of the other speakers at the summit had encouraging words for entrepreneurs who may be fretting that they won’t be able to sell or go public, especially if they have a well-developed line of products or services.

“Are you a feature, a product or a company?,” Lise Buyer,  a principal at Class V Group, which advises companies exploring the IPO option, asked startups to ask themselves. “If you’re a feature or a product, maybe you could go public at another time, but not now,” she said. “But if you’re a company, hang in there.”

Morgan Stanley banker Drew Guevara, meanwhile, had some advice for startups on how to play the M&A game. The trick, he said, was to make a potential acquirer feel like it wants you, rather than tacking on a “for sale” sign. “Have somebody say they want you.” After all, “you can’t do a hostile sell-side,” said Guevara, whose firm is involved in two hostile takeover deals this year — Microsoft’s failed takeover offer for Yahoo and Electronic Arts’ ongoing hostile bid for smaller rival Take-Two.

Photo: Summit at Stanford website

Déjà Vu for Clear Channel shareholders.  Ten months ago, they gathered in San Antonio to approve a $39.20 a share deal. Today, they’re back voting on a shaved price of $36 a share. The deal has seen enough drama over the past couple of years to rival an HBO series, with upset shareholders, wrangling between bankers and buyers and a showdown in court.  

The deal faces the same tough hurdle as the first time round. Under Texas law it needs two thirds support to win — and “no” votes count as against the deal. Clear Channel Chief Executive Mark Mays told Reuters in May that he didn’t have concerns about the vote because the deal had support from major shareholders such as Highfields, which agreed to keep up to $400 million equity in the company.

“Considering our stock was at $29 two days ago, it’s a fair deal from all aspects,” Mays said at the time.  The deal was also backstopped by funds being put into escrow until it closes, giving it a higher level of certainty that this time, it’ll close.  

Even after today, it isn’t exactly a green light all the way – the debt supporting the $17.9 billion deal has to be sold out and that’s no small feat in a clogged up credit market.

That’s leaving aside the bigger issue which is the future of a leveraged-up radio company in an economic downturn.

General Electric has bulked up on its health binge, moving to buy medical device maker Vital Signs for $860 million. Vital Signs shareholders are to get $74.50 per share in cash, a 28.4 percent premium to Wednesday’s closing price, and above the shares’ 52-week high of $61.20, reached on May 9. GE said the deal, which it expects to close in the fourth quarter, values Vital Signs at $860 million, net of cash and investments. It said that shareholders with a 37 percent stake in Vital Signs have agreed to vote in favor of the deal.

Chinese pickup truck maker Hebei Zhongxing Automobile Co is in talks with General Motors and major Chinese automaker FAW Group to explore opportunities for cooperation, including possible equity ties, a source close to the situation said. “Consolidation is inevitable in the Chinese auto market, which now has more than 100 players, and a company of Zhongxing’s size makes a good takeover target or joint venture partner,” the source told Reuters. “Zhongxing is holding talks with several potential partners including FAW and GM to seek cooperative opportunities, including possible equity ties, but nothing has been decided at the moment,” a source said.

Tribune has narrowed the potential list of bidders for the storied Chicago Cubs baseball team to 3-5 groups bidding $1 billion or more, according to sources briefed on the matter. Of the 10 groups approved to bid for the Cubs by Major League Baseball, only those that bid $1 billion or more for the team, its home ballpark Wrigley Field and a stake in a regional sports TV network advanced to the next round, said two sources, who asked not to be identified because the process is ongoing. While Tribune and baseball officials declined to comment, three sources said Internet billionaire Mark Cuban, owner of the National Basketball Association Dallas Mavericks; and a publicly held group led by New York City taxi tycoon Andrew Murstein were among those advancing. Others advancing included Tom Ricketts, chief executive of Incapital LLC, a Chicago securities and investment banking firm, and son of the founder of TD Ameritrade; and a group headed by Michael Tokarz, chairman of MVC Capital, one of the sources said. The Tokarz group includes Fred Malek, who previously bid on the baseball team in Washington.

Other deals of the day:

* The head of state-run Korea Development Bank said it would resume the delayed sale of Daewoo Shipbuilding in August, possibly wrapping up the $4 billion deal by end-2008.

* South Korea’s Hana Financial Group, the country’s No.4 banking group, said its banking unit would invest 329.6 billion won ($327 million) to take a 19.7 percent stake in the Bank of Jilin in China.

* Malaysia’s Maybank is set to buy another 5 percent of Pakistan’s MCB Bank as early as next month, in a deal estimated at $218 million, sources familiar with the matter said on Thursday.

* Intel Capital, the venture capital arm of top chipmaker Intel Corp, said it would pump $17 million into three Indian companies, comprising two Internet portals and one advertising firm.

* Mapletree Investments, a property firm owned by Singapore state investor Temasek, said it will support a rights issue by Mapletree Logistics Trust by buying units not taken up by other investors.

Diversification is the buzz word in pharmaceuticals as the feared 2010-2012 patent “cliff” looms nearer, when many of world’s top medicines lose patent protection.

New Glaxo CEO Andrew Witty, 43, is embracing the concept wholeheartedly via a bold deal with South Africa’s Aspen that takes the world’s second biggest drugmaker into generics in emerging markets and a strategy to broaden out the group.

But how long will Glaxo’s not-so-patient shareholders have to wait to reap the rewards?

Witty gave a confident performance during a two-hour meeting with analysts this week, but a sliding share price the day after suggests investors see little to cheer about just yet.

Investing for diversity to de-risk the business may make sense, but bulking up in non-prescription healthcare products, vaccines, biotech and emerging markets will take time – as well as money, as evidenced by the decision to delay completion of the company’s 12 billion pounds buyback programme.

“You can’t turn a supertanker on a dime,” says Deutsche Bank analyst Brian Bourdot.