Venture-Backed Exit Market Remains a Concern in the First Quarter
No IPO Activity for Two Consecutive Quarters; First Time on Record
Venture-Backed Liquidity Events by Year/Quarter, 2002-1Q 2009
*Total
M&A Disclosed *Average Total Average
Total Deals with M&A M&A Offer IPO Offer
M&A Disclosed Value Deal Size **Number Amount Amount
Quarter/Year Deals Values ($M) ($M) of IPOs ($M) ($M)
2003 284 119 7,460.1 62.7 29 2,022.7 69.7
2004 346 187 15,919.6 85.1 94 11,378.0 121.0
2005 352 166 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 62 26 5,616.8 216.0 19 1,589.1 83.6
2006 369 160 18,693.6 116.8 56 5,075.1 90.6
2007-1 85 29 4,540.3 156.6 18 2,190.6 121.7
2007-2 88 37 4,002.3 108.2 25 4,146.8 165.9
2007-3 107 54 11,265.4 208.6 12 945.2 78.8
2007-4 93 47 9,743.8 207.3 31 3,043.8 98.2
2007 373 167 29,551.9 177.0 86 10,326.3 120.1
2008-1 106 40 4,543.2 113.6 5 282.7 56.5
2008-2 84 26 3,293.4 126.7 0 0.0 n/a
2008-3 86 32 3,080.2 96.3 1 187.5 187.5
2008-4 61 17 2,385.9 140.3 0 0.0 n/a
2008 337 115 13,302.7 115.7 6 470.2 78.4
2009-1 56 13 645.3 49.6 0 0.0 0.0
2009 56 13 645.3 49.6 0 0.0 0.0
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 first quarter of 2009, marking the second consecutive quarter in which there were no issues. Since data has been recorded, there are no other incidences of two quarters without a venture-backed offering. Furthermore, no companies that received US venture financing went public on foreign exchanges in the first quarter.
Twenty-six venture-backed companies are currently filed for an initial public offering with the SEC. This level falls short of 4Q 2008 when 28 venture-backed companies were in registration. Additionally, there were six venture-backed IPOs withdrawn from registration in the first quarter.
"We predicted that the venture-backed IPO market was going to get worse before it was going to get better, and we were unfortunately correct," said Mark Heesen, president of the NVCA. "Today our concerns are not limited to the zero IPO issues but have now expanded to the shrinking pipeline of companies in registration. Once we begin to see a recovery, there won't be many companies prepared to take advantage of it, effectively extending the lackluster market until the pipeline rebuilds."
Mergers and Acquisitions Overview
As of
"Given the non-existent IPO market, corporate acquirers are in a position to be more selective and bide their time when considering acquisitions," continued Heesen. "We expect to see a slowing of transactions this year as the best venture-backed companies will wait for market conditions to improve rather than accepting the lower valuations associated with the challenging market."
The Information Technology sector led the venture-backed M&A landscape,
with 42 deals and a disclosed total dollar value of
Venture-Backed M&A Industry Breakdown
Q1 2009
Number
of
Venture- Total
Number Backed Disclosed
of M&A Venture-
Venture- deals Backed
Backed with a Deal
M&A disclosed Value
Industry deals value ($M)
Communications and Media 5 1 47.0
Internet Specific 9 0 0.0
Computer Software and Services 24 5 107.7
Semiconductors/Other Elect. 3 2 193.5
Information Computer Hardware 1 0 0.0
Technology TOTAL 42 8 348.2
Medical/Health 6 3 262.3
Biotechnology 5 2 34.7
Life Sciences TOTAL 11 5 297.0
Non-High Other Products 3 0 0.0
Technology TOTAL 3 0 0.0
TOTAL 56 13 645.2
Source: Thomson Reuters & National Venture Capital Association
The largest transaction of the quarter was the acquisition of medical
equipment manufacturer Ablation Frontiers by Meditronic, also a medical
equipment concern. The transaction, valued at
Deals bringing in the top returns, those with disclosed values greater than four times the venture investment, accounted for 23 percent of the total in the first quarter of 2009, significantly lower than in the first quarter of 2008 when these deals accounted for 46 percent. Those deals returning less than the amount invested accounted for 54 percent of the quarter's total, compared to 29 percent of the total in the comparable period of 2008.
Analysis of Transaction Values versus Amount Invested
Relationship between transaction value
and investment Q108 Q109
M&A** M&A**
Deals where transaction value is less than
total venture investment 10 7
Deals where transaction value is 1-4x total
venture investment 9 3
Deals where transaction value is 4x-10x
total venture investment 11 3
Deals where transaction value is greater
than 10x venture investment 5 0
Total Disclosed Deals 35 13
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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About
SOURCE Thomson Reuters
-0- 04/01/2009
/CONTACT: Emily Mendell of NVCA, +1-610-565-3904, emendell@nvca.org; or
Sandy Anglin , Thomson Reuters, Research Analyst, +1-646-223-6997,
sandy.anglin@thomsonreuters.com, or Sandra Lee , Thomson Reuters, Public
Relations, +1-646-223-5292, sandra.lee@thomsonreuters.com/
/Web Site: http://www.thomsonreuters.com /
(TRI TRIN TRI TRIN)
CO: Thomson Reuters; National Venture Capital Association ; NVCA
ST:
IN: FIN PUB
SU: VEN ECO SVY
PR
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2401 04/01/2009 08:00 EDT http://www.prnewswire.com