Venture-Backed Acquisition Quarterly Volume Hits 10 Year Low While Average
Disclosed Value Hits 7 Year High
NEW YORK, Jan. 2 /PRNewswire-FirstCall/ -- Thirty-one venture-backed
initial public offerings totaling $3.0 billion in proceeds were issued in the
fourth quarter of 2007, according to the Exit Poll report by Thomson Financial
and the National Venture Capital Association (NVCA). This volume represents
the highest quarterly number of IPO's since the third quarter of 2000. For
the year, 86 venture-backed companies went public for $10.3 billion, a 51
percent increase in volume over 2006 when 57 companies went public for $5.1
billion. In contrast, the venture-backed M&A market had only 45 deals in the
fourth quarter, 22 of which had a combined disclosed value totaling $5.0
billion, the lowest number of total M&A exits since 1Q 1998 when there were 44
M&A exits. For the year, there were 304 venture-backed M&A transactions with a
total disclosed value of $23.7 billion, the highest disclosed values since
2000.
"This past year was marked by improving quality of both venture-backed
IPO's and M&A transactions," said Mark Heesen, president of the NVCA. "In the
coming year, we would like to uphold that quality while increasing quantity on
both exit fronts. An ideal year would see more than one hundred venture-
backed IPO's and 350 or more acquisitions. But we don't want to sacrifice
quality to hit that threshold."
Venture-Backed Liquidity Events by Year/Quarter, 2001-2007
Total M&A *Total *Average Average
M&A Deals Disclosed M&A Total IPO
Deals with M&A Deal Offer Offer
Disclosed Value Size **Number Amount Amount
Quarter/Year Values ($M) ($M) of IPO's ($M) ($M)
2001 353 165 16,798.9 101.8 41 3,489.9 85.1
2002 318 152 7,916.4 52.1 22 2,109.1 95.9
2003 291 123 7,726.1 62.8 29 2,022.7 69.8
2004-1 80 45 3,921.0 87.1 13 2,721.1 209.3
2004-2 89 48 4,514.6 94.1 29 2,077.8 71.7
2004-3 86 47 4,142.8 88.2 24 3,225.6 134.4
2004-4 84 46 2,862.2 62.2 27 2,990.4 110.8
2004 339 186 15,440.6 83.0 93 11,014.9 118.4
2005-1 82 46 4,364.9 94.9 10 720.7 72.1
2005-2 80 36 4,791.0 133.1 10 714.1 71.4
2005-3 98 47 4,374.8 93.1 19 1,458.1 76.7
2005-4 87 39 2,563.7 65.7 17 1,568.1 92.2
2005 347 168 16,094.4 95.8 56 4,461.0 79.7
2006-1 105 49 5,446.4 111.2 10 540.8 54.1
2006-2 104 39 3,935.6 100.9 19 2,011.0 105.8
2006-3 93 42 3,894.8 92.7 8 934.2 116.8
2006-4 61 25 3,866.8 154.7 20 1,631.1 81.6
2006 363 155 17,143.5 110.6 57 5,117.1 89.8
2007-1 82 29 4,540.3 156.6 18 2,190.6 121.7
2007-2 82 34 3,876.8 114.0 25 4,146.8 165.9
2007-3 95 50 10,300.5 206.0 12 945.2 78.8
2007-4 45 22 5,025.6 228.4 31 3,043.8 98.2
2007 304 135 23,743.3 175.9 86 10,326.3 120.1
Thomson Financial & 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
The Information Technology (IT) sector saw the majority of venture-backed
companies come to the public market with 17 IPO's raising $1.5 billion during
the fourth quarter. This activity represents an increase from the previous
quarter when there were nine issues in the IT sector accounting for $684.5
million in proceeds. The largest IPO in the IT sector in the fourth quarter
was Longtop Financial Technologies, Ltd.'s $182.6 million issue, managed by
Goldman Sachs and Deutsche Bank. Longtop Financial Technologies, Ltd. is a
software and solutions developer catering to the IT needs of rapidly
developing financial institutions in China. Venture investment in the company
totaled $48.2 million from Tiger Global and an undisclosed firm across two
rounds.
The Life Sciences industry accounted for an additional ten venture-backed
IPO's during the fourth quarter of 2007. The largest issue in this sector was
the $98.0 million issue by Nanosphere, Inc., an Illinois based company whose
Verigene System automates the analysis and ultra-sensitive detection of
nucleic acids and proteins. Venture investors in the company include Allen &
Company, Bain Capital, Brookside International Incorporated, Lurie Investment
Fund, NGEN Partners LLC, and undisclosed individuals and investors. In total,
these firms invested $80.1 million of venture capital in Nanosphere.
In full-year 2007, the IT sector accounted for the most venture-backed
IPO's, totaling 47 issues and $6.0 billion in volume. Life Sciences followed
with 32 issues and $2.6 billion in proceeds.
Venture-Backed IPO Industry Breakdown
Q4 2007
*Number
of Total
Venture- Venture-
Backed Backed
IPO's in Offering
Industry the U.S. Size ($M)
Internet Specific 4 291.2
Communications and Media 2 134.7
Computer Software and
Services 7 836.9
Information Semiconductors/Other Elect. 4 246.8
Technology TOTAL 17 1,509.7
Medical/Health 6 342.9
Biotechnology 4 320.5
Life Sciences TOTAL 10 663.4
Consumer Related 2 487.8
Non High- Other Products 2 383.0
Technology TOTAL 4 870.8
TOTAL 31 3043.8
*Includes all companies with at least one U.S. VC investor that trade on
U.S. exchanges, regardless of domicile
The Boston metropolitan region, followed by San Jose and Chicago, had the
most venture-backed companies with IPO in the fourth quarter. In Boston,
there was one IPO apiece in Communications and Media, Computer Software and
Services, Semiconductors and Other Electric, and Biotechnology industries. In
San Jose, there was one issue each in Computer Software and Services,
Biotechnology, and Medical/Health sectors. Chicago, had offerings in
Communications and Media, Semiconductors and Other Electric, and
Biotechnology.
Foreign IPO's on US exchanges accounted for $933.0 million in proceeds in
the fourth quarter, the highest proceeds since 1Q 2004 when two issues, led by
the largest venture capital issue ever, Semiconductor Manufacturing
International Corporation, raised $1.9 billion. The largest issue by proceeds
of the quarter was by Chinese company China Nepstar Chain Drugstore, Ltd., a
retail drugstore chain in China, which raised $334.1 million on the NYSE. GS
Capital Partners, L.P. was the sole investor in this company.
For the full-year 2007, San Jose led the metro regions with 19 issues and
$2.0 billion in funds raised by venture-backed companies which went public in
2007. The region accounted for 21.5% of the annual value of funds raised by
companies in the US marketplace. Boston followed with 17 issues and $1.3
billion in volume.
4Q 2007 Venture-Backed IPO Metro Region
Breakdown
*Number of
Venture-Backed
Metro Region IPO's in the U.S.
Boston 4
San Jose 4
Chicago 3
Twin Cities 3
San Fran/Berkeley 2
Washington Metroplex 2
San Diego Metro 2
Philadelphia 1
Great Lakes 1
Los Angeles 1
Other US 3
Non US 5
TOTAL 31
*Includes all companies with at least one U.S. VC investor that trade on
U.S. exchanges, regardless of domicile
As of December 31, 2007, 58 percent of the venture-backed companies that
went public during 2007 were trading at or above their offering price.
Sixty venture-backed companies have filed for an initial public offering
with the SEC since 2006 and are currently "in registration." This marks a
decrease from the previous quarter when 72 venture-backed companies were in
registration.
In addition to the U.S. market activity, ten companies that received US
venture financing went public on foreign exchanges in the fourth quarter.
Exchanges for these listings includes Bombay, Euronext Brussels, Hong Kong,
London AIM, Madrid, National, Singapore, and Taiwan.
The largest IPO of the year was MetroPCS Communication Inc's $1.2 billion
issue in April, the third largest issue of all time.
Merger and Acquisition Overview
In the fourth quarter of 2007, only 45 venture-backed M&A deals were
completed, the lowest level since 1Q 1998, when 44 disclosed deals accounted
for $3.1 billion in value. While deal volume was at a nine year low, average
disclosed quarterly dollar volume reached $228.4 million, the higher average
figure seen since the year 2000.
The Non-Tech sector dominated the venture-backed M&A landscape, with 5
deals and a disclosed total dollar value of approximately $2.2 billion.
Information Technology industries saw the next highest disclosed dollar volume
at $2.0 billion. Within this industry the Computer Software and Services
sector reached $1.2 billion in disclosed deal value - 59 percent of the
overall value within technology businesses. For full-year 2007, Information
Technology targets dominated the M&A scene accounting for $13.6 billion in
deals.
Venture-Backed M&A Industry Breakdown
Q4 2007
Number of Total
Venture- Disclosed
Number of Backed Venture-
Venture- M&A Backed
Backed deals with Deal
M&A a disclosed Value
Industry deals value ($M)
Communications and Media 3 1 140.0
Internet Specific 12 4 668.5
Computer Software and
Services 13 7 1150.9
Semiconductors/Other Elect. 3 - -
Information Computer Hardware 1 - -
Technology TOTAL 32 12 1,959.5
Life Medical/Health 8 6 841.4
Sciences TOTAL 8 6 841.4
Other Products 3 3 1549.8
Industrial/Energy 2 1 675.0
Other TOTAL 5 4 2,224.8
TOTAL 45 22 5,025.6
Source: Thomson Financial & National Venture Capital Association
The largest disclosed deal of the quarter was the $925 million acquisition
of Oxygen Media LLC, an internet and cable television programming network
targeting women, by NBC Universal in October. The second largest deal was the
$675 million acquisition of mainstream-energy services provider Cantera
Natural Gas LLC by Copano Energy LLC completed in October.
The largest deal of the year was the $1.4 billion acquisition of Worldspan
Technologies by Travelport, Inc., which occurred in the 3rd quarter. The next
largest deal was the Oxygen Media deal mentioned above.
Deals bringing in the top returns, those with disclosed values greater
than four times the venture investment, accounted for 47 percent of the total
compared to 60 percent last quarter. Those deals returning less than the
amount invested accounted for 21 percent of the quarter's total, up from 13
percent of the total last quarter. For the full year 2007, 43 percent of the
M&A transactions returned more than four times the venture investment,
compared to 36 percent in 2006. Twenty-five percent of the deals in 2007 had
transaction values less than the venture investment compared to 2006 when 28
percent of the deals were valued at less than the venture investment.
Analysis of Transaction Values versus Amount Invested
Relationship between transaction Q307 Q407 2006 2007
value and investment M&A** M&A** M&A** M&A**
Deals where transaction value is less than total
venture investment 6 4 42 32
Deals where transaction value is 1-4x total
venture investment 13 6 54 41
Deals where transaction value is 4x-10x total
venture investment 16 2 30 28
Deals where transaction value is greater than
10x venture investment 12 7 25 27
Total Disclosed Deals 47 19 151 128
Source: Thomson Financial & National Venture Capital Association
** Disclosed deals that do not have a disclosed total investment amount
are not included.
About Thomson Financial
Thomson Financial, with 2006 revenues of US$2 billion, is a provider of
information and technology solutions to the worldwide financial community.
Through the widest range of products and services in the industry, Thomson
Financial helps clients in more than 70 countries make better decisions, be
more productive and achieve superior results. Thomson Financial is part of The
Thomson Corporation (www.thomson.com), a global leader in providing essential
electronic workflow solutions to business and professional customers. With
operational headquarters in Stamford, Conn., Thomson provides value-added
information, software tools and applications to professionals in the fields of
law, tax, accounting, financial services, scientific research and healthcare.
The Corporation's common shares are listed on the New York and Toronto stock
exchanges (NYSE: TOC; TSX: TOC).
The National Venture Capital Association (NVCA) represents approximately
480 venture capital and private equity firms. NVCA's mission is to foster
greater understanding of the importance of venture capital to the U.S.
economy, and support entrepreneurial activity and innovation. According to a
2007 Global Insight study, venture-backed companies accounted for 10.4 million
jobs and $2.3 trillion in revenue in the United States in 2006. The NVCA
represents the public policy interests of the venture capital community,
strives to maintain high professional standards, provides reliable industry
data, sponsors professional development, and facilitates interaction among its
members. For more information about the NVCA, please visit www.nvca.org.
SOURCE Thomson Financial; National Venture Capital Association
Emily Mendell, NVCA, +1-610-565-3904, emendell@nvca.org; Matthew Toole,
+1-646-822-7560, matthew.toole@thomson.com, or Sandy Anglin, +1-646-822-7334,
sandy.anglin@thomson.com, both of Thomson Financial
