IPO Exits at 30 Year Low, M&A Activity Slows
"The most significant impact of the US financial crisis on the venture capital industry has clearly taken place in the exit markets," said
Venture-Backed Liquidity Events by Year/Quarter, 2002-2008 M&A *Total *Average Average Deals Disclosed M&A Total IPO Total with M&A Deal Offer Offer Quarter/ M&A Disclosed Value Size **Number Amount Amount Year Deals Values ($M) ($M) of IPO's ($M) ($M) 2002 319 154 7,586.7 49.3 22 2,109.1 95.9 2003 284 119 7,460.1 62.7 29 2,022.7 69.8 2004 346 187 15,919.6 85.1 94 11,378.0 121.0 2005-1 81 45 4,351.9 96.7 10 720.7 72.1 2005-2 81 34 4,725.0 139.0 10 714.1 71.4 2005-3 102 48 5,739.5 119.6 19 1,458.1 76.7 2005-4 87 39 2,594.0 66.5 18 1,592.1 88.5 2005 351 166 17,410.6 104.9 57 4,485.0 78.7 2006-1 107 52 5,607.5 107.8 10 540.8 54.1 2006-2 106 40 4,018.5 100.5 19 2,011.0 105.8 2006-3 94 42 3,450.8 82.2 8 934.2 116.8 2006-4 63 26 5,616.8 216.0 20 1,631.1 81.6 2006 370 160 18,693.6 116.8 57 5,117.1 89.8 2007-1 83 29 4,540.3 156.6 18 2,190.6 121.7 2007-2 86 36 3,972.3 110.3 25 4,146.8 165.9 2007-3 103 52 10,810.0 207.9 12 945.2 78.8 2007-4 88 43 9,084.1 211.3 31 3,043.8 98.2 2007 360 160 28,406.7 177.5 86 10,326.3 120.1 2008-1 73 30 3,929.4 131.0 5 282.7 56.6 2008-2 72 22 4,154.0 188.8 0 0.0 0.0 2008-3 78 29 3,741.1 129.0 1 187.5 187.5 2008-4 37 15 2,090.9 139.4 0 0.0 0.0 2008 260 96 13,915.4 145.0 6 470.2 78.4 Thomson Reuters & National Venture Capital Association *Only accounts for deals with disclosed values **Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile.
IPO Activity Overview
There were no venture-backed IPOs in the fourth quarter of 2008, the second quarter of the year with no activity. The last year there were two quarters without any IPO activity was 1975, when both the first and fourth quarters had zero exits. By dollar volume, total IPO proceeds in 2008 reached
Echoing domestic trends, no companies that received US venture financing went public on foreign exchanges in the fourth quarter.
As of
Twenty-eight venture-backed companies are currently filed for an initial public offering with the SEC. This level falls short of 3Q 2008 when 38 venture-backed companies were in registration. There were 40 venture-backed IPOs withdrawn from registration in 2008.
For the full-year period, four venture-backed IPO exits totaling
The largest IPO of the year was the
Mergers and Acquisitions Overview
As of
The Information Technology sector dominated the venture-backed M&A landscape, with 30 deals and a disclosed total dollar value of
For full-year 2008, Information Technology transactions accounted for the majority of M&A exits and volume, with 190 transactions and disclosed aggregate values of
Venture-Backed M&A Industry Breakdown Q4 2008 Number of Venture- Total Backed Disclosed Number of M&A Venture- Venture- deals Backed Backed with a Deal M&A disclosed Value Industry deals value ($M) Information Communications and Technology Media 2 1 180.0 Internet Specific 11 5 320.7 Computer Software and Services 10 3 392.2 Semiconductors/Other Elect. 5 1 60.0 Computer Hardware 2 1 19.3 TOTAL 30 11 972.2 Life Sciences Medical/Health 4 3 173.7 TOTAL 4 3 173.7 Non-High Other Products 2 1 945.0 Technology Consumer Related 1 0 0.0 TOTAL 3 1 945.0 TOTAL 37 15 2,090.9 Source: Thomson Reuters & National Venture Capital Association
The largest transaction of the quarter was the acquisition of online payment and marketing technology solutions provider Bill Me Later by eBay. The transaction, valued at
In the largest transaction of the year, EqualLogic, Inc, a developer of storage area network solutions, was purchased by Dell, Inc. for
Deals bringing in the top returns, those with disclosed values greater than four times the venture investment, accounted for 43 percent of the total in the fourth quarter of 2008, slightly lower than in the third quarter when these deals accounted for 45 percent. Those deals returning less than the amount invested accounted for 21 percent of the quarter's total, compared to 24 percent of the total last quarter.
For 2008, 46 percent of M&A transactions returned more than four times the venture investment, compared to 41 percent in full-year 2007. Twenty-eight percent of the deals in 2008 had transaction values less than the venture investment, compared to 2007 when 23 percent of the deals were valued at less than the venture investment.
Analysis of Transaction Values versus Amount Invested Relationship between transaction Q308 Q408 2007 2008 value and investment M&A** M&A** M&A** M&A** Deals where transaction value is less than total venture investment 7 3 34 24 Deals where transaction value is 1-4x total venture investment 9 5 55 23 Deals where transaction value is 4x-10x total venture investment 9 4 32 26 Deals where transaction value is greater than 10x venture investment 4 2 29 14 Total Disclosed Deals 29 14 150 87 Source: Thomson Reuters & National Venture Capital Association ** Disclosed deals that do not have a disclosed total investment amount are not included.
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SOURCE Thomson Reuters