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Q1 2013 Venture Exits Update

March 31, 2013

M&A Down Slightly, IPOs Down Dramatically 
75% of M&A Deals IT, 12% Healthcare
Average Disclosed M&A Deal Value Down, Q1 IPOs Trading Up

Exit Poll report by Thomson Reuters and the National Venture Capital Association; 2013 annualized from Q1

There were 77 venture backed M&A transactions in Q1 2013 with $984MM in disclosed deal value.  The number of transactions fell 4% on a rolling four quarter basis, while disclosed value fell 12%.  However, the value of only 13% of transactions was disclosed in Q1 2013, while in 2012 the deal value was disclosed for an average of 26% of transactions.  Consequently, the decrease in disclosed value is not necessarily representative of the health of the M&A market.

75% of venture backed M&A transactions were IT companies in Q1 2013, while 12% were Healthcare, and 13% were in other industries.  Average disclosed M&A deal value fell from $174MM in 2012 to $98MM in Q1 2013, which again may not be representative of the M&A market due to the lower percentage of deal values disclosed.  Of disclosed deals, average values were highest in the Healthcare sector, averaging $149MM, while IT deals averaged $72MM and other industry transactions averaged $30MM in Q1 2013.

In Q1 2013, eight venture backed companies went public, raising a total of $672MM.  This was a 22% decline in the number of offerings and a 5% decline in the amount raised on a rolling four quarter basis.  While correlated, amount raised in an IPO is not necessarily representative of the valuation of companies at IPO.  Seven of the eight companies that went public in Q1 2013 are now trading up.

75% of the IPOs were IT companies and the remaining 25% were in the Healthcare industry.  Five listed on the NASDAQ and the remaining three on the NYSE.  There are now 25 venture backed companies filed publicly with the SEC for IPOs, not including those that may have filed confidentially under the JOBS Act.

John Taylor, head of research for the NVCA, noted that,

“First quarter IPO and acquisitions activity is often subdued as year-end reporting and forward planning take priority, but this year political, taxation, and sequestration concerns weighed even more heavily on the exit market for emerging growth companies… That said, public market valuations have been up recently… and quality companies tell us they are starting the process toward an exit later in the year… Barring significant adverse events, we expect stronger volume in the second and third quarters.”

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