M&A Volume Begins to Rebound
Healthcare Leads IPOs, While IT Leads M&A
Exit Poll report by Thomson Reuters and the National Venture Capital Association ; 2014 annualized from 03/31/14
There were 105 US venture backed M&A transactions in Q1 2014 with $7.5B in disclosed deal value according to the Exit Poll report by Thomson Reuters and the NVCA. Disclosed deal value on a rolling four quarter basis increased 38%, partially due to a 19% increase in the number of deals disclosed. Additionally, the average M&A deal size reached $259MM in Q1 2014, the highest level since 2004. According to PitchBook, the median deal size was $40MM in Q1 2014 of 111 venture backed M&A exits globally (PitchBook Data, Inc. 2014).
75% of venture backed M&A transactions in Q1 2014 were in the IT industry, while 12% were Healthcare companies and those remaining were in other sectors. IT deals had the highest average disclosed deal value of $172MM, while disclosed Healthcare deals averaged $139MM. However, the total average disclosed deal value for Q1 2014 was driven primarily by the acquisition of Nest Labs in the consumer sector by Google for $3.2B. Nest is a Palo Alto-based provider of smart home hardware products and was previously backed by Kleiner Perkins, Lightspeed, Shasta, and Venrock, among others.
US venture backed IPOs reached their highest level since 2000 in Q1 2014 with 36 companies raising $3.3B according to the Exit Poll report by Thomson Reuters and the NVCA. PitchBook also reported 44 venture backed IPOs globally. There have been four consecutive quarters of over 20 venture backed IPOs in the US and the number of listings increased 35% on a rolling four quarters basis, while dollars raised increased 23%. Although amount raised is not necessarily representative of the valuation of companies at IPO, 86% of the companies taken public in Q1 2014 are currently trading above their offering price.
Healthcare companies continued to account for the greatest percentage of IPOs, representing 67% in Q1 2014. The largest venture backed IPO of the quarter was Castlight Health (CSLT), a San Francisco-based healthcare IT company that raised $204MM on 03/13/14. CSLT was formerly backed by Venrock, Oak, and USVP, among others, and is now trading on the NYSE at a 39% premium to its offering price. Twenty-eight of the venture backed IPOs in Q1 2014 listed on the NASDAQ, while eight listed on the NYSE. The number of venture backed companies that have currently filed publicly with the SEC for IPOs remained relatively stable at 46, which does not include companies that may have filed confidentially under the JOBS Act.
Bobby Franklin, President and CEO of the NVCA, noted,
“Building on the momentum of 2013, the venture backed exit market is continuing to flourish in 2014. We are encouraged to see life sciences companies experience a period of revival in the public markets. Led by the biotechnology sector, 24 of the 36 IPOs this quarter were life sciences companies.”
The views, opinions, beliefs, conclusions, and other information expressed in this material is not given, verified, or endorsed by Square 1 Bank, a division of Pacific Western Bank. Instead, this material is solely the work of the author, and represents his views, opinions, beliefs, conclusions, and other information he wishes to present, in all cases without any manner of endorsement from or verification by Square 1 Bank, a division of Pacific Western Bank.
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that the author believes to be reliable, but which has not been independently verified by the author or Square 1 Bank, a division of Pacific Western Bank, and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal, or other advice, nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to this material should be construed as a solicitation, offer, or recommendation to acquire or dispose of any investment, or to engage in any other transaction.
All material presented, unless specifically indicated otherwise, is under copyright to the author or Square 1 Bank, a division of Pacific Western Bank, and is for informational purposes only. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied, or distributed to any other party, without the prior express written permission of Square 1 Bank, a division of Pacific Western Bank or the author. All trademarks, service marks, and logos used in this material are trademarks, service marks, or registered trademarks of Square 1 Bank, a division of Pacific Western Bank.
Square 1 Bank is a division of Pacific Western Bank, member FDIC.