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 (http://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 http://www.nvca.org.
SOURCE Thomson Financial; National Venture Capital Association
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Related links:
http://www.thomsonfinancial.com
http://www.nvca.org
CONTACT:
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
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