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Korea M&A Corporation
VC Exit Market Not Impacted by Market Volatility and Sub Prime Concerns in 3Q 2007 본문
VC Exit Market Not Impacted by Market Volatility and Sub Prime Concerns in 3Q 2007
Korea M&A 2007. 10. 9. 20:06NEW YORK, Oct. 1 /PRNewswire-FirstCall/ -- Sixty-seven venture-backed mergers and acquisitions were completed in the third quarter of 2007, 34 of which had disclosed values totaling $7.7 billion, according to the Exit Poll report by Thomson Financial and the National Venture Capital Association (NVCA). This dollar volume represents a 104 percent increase from the same quarter last year when 41 disclosed deals accounted for $3.8 billion in value. Additionally, the average disclosed acquisition value was at its highest level since the fourth quarter of 2000. The venture-backed IPO market had 12 offerings for $945.2 million in 3Q 2007, a slight increase from the same quarter last year when $934.2 million was raised from 8 offerings.
"The third quarter was marked by significant stock market volatility and growing concerns about the state of sub-prime mortgages. Venture-backed companies navigated these hurdles well as evidenced by strong M&A transactions and a growing pipeline of venture-backed companies in registration," said Mark Heesen, president of the National Venture Capital Association. "However, both exit strategies will be facing challenges over the next several quarters. Anecdotally, we are hearing that acquisitions are taking longer to close as corporations remain cautious in an unpredictable market. Additionally, a growing number of venture-backed companies are trading below their offering prices, signaling potential market weakness. Both these concerns are surmountable but will factor into the health of the overall exit market," Heesen added.
Venture-Backed Liquidity Events by Year/Quarter, 2001-2007ytd
M&A *Total *Average Average
Deals Disclosed M&A Total IPO
Total with M&A Deal Offer Offer
Quarter/Year M&A Disclosed Value Size **Number Amount Amount
Deals Values ($M) ($M) of IPOs ($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
2006-1 104 48 5,384.4 112.2 10 540.8 54.1
2006-2 95 37 3,747.6 101.3 19 2,011.0 105.8
2006-3 90 41 3,769.8 92.0 8 934.2 116.8
2006-4 61 25 3,866.8 154.7 20 1,631.1 81.6
2006 350 151 16,768.5 111.1 57 5,117.1 89.8
2007-1 80 29 4,540.3 156.6 18 2,190.6 121.7
2007-2 81 33 3,837.8 116.3 25 4,146.8 165.9
2007-3 67 34 7,693.7 226.3 12 945.2 78.8
2007 228 96 16,071.8 167.4 55 7,282.5 132.4
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 Technology sector saw the majority of venture-backed companies come to the public market with 9 IPO's raising $684.5 million during the third quarter. This activity represents a decline from the previous quarter when there were more than twice as many issues accounting for four times the dollar volume. The largest IPO in the Technology sector in the third quarter was Athenahealth, Inc's $113.2 million issue, managed by Goldman Sachs and Merrill Lynch. Athenahealth Inc. provides medical groups with application and business services such as billing and collections, subscription services, and cost reduction methods. Venture investors in Athenahealth include Draper Fisher Jurvetson, The Lambda Funds, Oak Investment Partners, Venrock Associates, Cardinal Partners, Draper Richards, and Granite Global Ventures.
The Life Sciences industry accounted for the remaining three venture- backed IPO's during the third quarter of 2007. The largest issue in this sector, also the largest IPO of the third quarter, was the $202.6 million issue by Masimo Corporation, a developer, licensor, and marketer of medical signal processing technologies and products. Venture investors in Masimo include Cardinal Partners, Warburg Pincus, JP Morgan Partners, Camden Partners, Opus Capital and The Vertical Group.
Venture-Backed IPO Industry Breakdown
Q3 2007
*Number Total
of Venture-
Venture- Backed
Backed Offering
IPOs in Size
Industry the U.S. ($M)
Internet Specific 3 240.4
Communications/Media 3 185.1
Computer Software and Svcs. 2 151.0
Computer Hardware 1 108.0
Technology TOTAL 9 684.5
Medical/Health 2 245.7
Life Biotechnology 1 15.0
Sciences TOTAL 3 260.7
TOTAL 12 945.2
*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 Orange County, had the most venture-backed companies with IPO exits in 3Q 2007. In Boston, where the IPO dollar volume reached the highest level across all metro regions, two companies focused in Communications and Media, one focused in Computer Software and Services, and one focused in Internet Specific technologies. In San Jose, there was one issue each in the Communications/Media and Computer Software and Services sectors. Orange County, had offerings in both the Internet Specific and Medical/Health sectors.
3Q 2007 Venture-Backed IPO Metro Region Breakdown
*Number of Total Venture-
Venture-Backed Backed Offering
Metro Region IPO's in the U.S. Size ($M)
Boston 4 308.2
San Jose 2 141.1
Orange County 2 268.2
Other US 4 227.7
TOTAL 12 945.2
*Includes all companies with at least one U.S. VC investor that trade on
U.S. exchanges, regardless of domicile
As of September 27, 2007, 58 percent of the venture-backed companies that went public during the rolling twelve month period were trading at or above their offering price.
Seventy-two venture-backed companies have filed for an initial public offering with the SEC since 2006 and are currently "in registration." This marks a significant increase from the previous quarter when 44 venture-backed companies were in registration.
In addition to the U.S. market activity, four companies that received US venture financing went public on foreign exchanges in the third quarter. These companies include the Bank of Nanjing, a Chinese bank listed on the Shanghai Stock Exchange, GlobeOp Financial Services, a UK financial services company listed in the London Stock Exchange, K.P.R. Mill Ltd., an Indian apparel company listed on the Bombay Stock Exchange, and Motilal Oswal Financial Services, Ltd., an Indian financial services company listed on the Bombay Stock Exchange.
Merger and Acquisition Overview
In the third quarter of 2007, total disclosed venture-backed M&A dollar volume reached the highest level since 1Q 2001, when 37 disclosed deals accounted for $7.7 billion in value. Additionally, the average deal size for disclosed venture-backed M&A transactions has not reached 3Q 2007 levels since the fourth quarter of 2000.
The Technology sector dominated the venture-backed M&A landscape, with 45 deals with disclosed values of approximately $3.8 billion. The Computer Software/Services and Internet Specific industries saw 17 and 15 transactions, respectively. The Internet Specific sector reached $2.2 billion in disclosed deal value - 59 percent of the overall value within technology businesses. The Life Sciences and other sectors accounted for $1.2 billion and $2.7 billion of the total dollar volume, respectively.
Venture-Backed M&A Industry Breakdown
Q3 2007
Number of
Venture- Total
Number Backed Disclosed
of M&A Venture-
Venture- deals Backed
Backed with a Deal
M&A disclosed Value
Industry deals value ($M)
Communications/Media 7 2 138.5
Internet Specific 15 7 2236.2
Computer Software and Srvs. 17 6 826.11
Semiconductors 3 3 526.4
Computer Hardware 3 1 60.3
Technology TOTAL 45 19 3,787.5
Medical/Health 5 3 510.5
Life Biotechnology 3 3 731.3
Sciences TOTAL 8 6 1241.8
Other Products 10 5 1691.4
Consumer Related 2 2 885.0
Industrial/Energy 2 2 88.0
Other TOTAL 14 9 2,664.4
TOTAL 67 34 7,693.7
Source: Thomson Financial & National Venture Capital Association
The largest disclosed deal of the quarter was the $1.4 billion acquisition of Worldspan Technologies, provider of mission-critical technology services to the global travel industry, by Travelport Inc in August. The second largest deal was the $775 million acquisition of denim apparel manufacturer and vendor, 7 For All Mankind, by VC Corp.
Signaling strength in the acquisitions market, deals bringing in the top returns, those with disclosed values greater than four times the venture investment, accounted for 62.5 percent of the total compared to 22 percent last quarter. Conversely, those deals returning less than the amount invested accounted for 9 percent of the quarter's total, down from 44 percent of the total last quarter.
"The marked increase in deals garnering top returns reflects acquirors' confidence in these venture-backed companies," said Alex Tan, Global Private Equity Research Manager at Thomson Financial. "Investors believe these venture-backed companies will be strong performers in the future."
Analysis of Transaction Values versus Amount Invested
Relationship between transaction value
and investment Q207 Q307
M&A** M&A**
Deals where transaction value is less than total
venture investment 14 3
Deals where transaction value is 1-4x total
venture investment 11 9
Deals where transaction value is 4x-10x total
venture investment 5 13
Deals where transaction value is greater than
10x venture investment 2 7
Total Disclosed Deals 32 32
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 .
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.