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Q2 2013 Venture Exits Update

// Wiley Becker - Guest Contributor

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June 30, 2013
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IPOs Rebound, but M&A Continues Slide
Healthcare Leads IPOs, while IT Leads M&A
Venture Backed IPO Pipeline also Jumps

Exit Poll report by Thomson Reuters and the National Venture Capital Association; 2013 annualized from 06/30/13

In Q2 2013, there were 84 venture backed M&A transactions with $3.0B in disclosed deal value.  Number of transactions continued to decline by 8% on a rolling four quarter basis, while disclosed value also fell by 17%.  The fall in disclosed value may partly be due to a decline in the percentage of deals with disclosed value from 24% to 22% over the same time period.

83% of venture backed M&A transactions were in the IT industry in Q2 2013, while 13% were Healthcare companies and the remaining 4% in other sectors.  Average disclosed deal value was flat on a rolling four quarter basis at $175MM, while reaching $214MM in the Healthcare sector and $189MM in IT industries.  The IT sector was boosted significantly by Yahoo!’s $1.1B acquisition of Tumblr, which was the fourth acquisition made by Yahoo! thus far in 2013.

Venture backed IPOs rebounded dramatically in Q2 2013 with 21 companies raising $2.1B.  This was a 24% increase in the number of IPOs on a rolling four quarter basis.  While amount raised is down 74% over the same time period, it is skewed by the unusually large $17.2B raised in Q2 2012 and is not necessarily representative of the valuation of companies at IPO.  Currently, 71% of the companies that went public in Q2 2013 are trading above their offering price.

While 62% of the IPOs in Q2 2013 were Healthcare companies, Tableau Software, a Seattle based analytics software company, was the largest IPO of the quarter raising $292MM.  The 11 biotechnology IPOs in Q2 2013 did represent the highest level for that sector since Q3 2000.  All 11 biotechnology IPOs listed on the NASDAQ, along with three others, while six companies listed in the NYSE in Q2 2013.  Currently, there are 39 venture backed companies that have filed publicly with the SEC for IPOs, representing a 59% increase over last quarter.  This figure does not include companies that may have filed confidentially under the JOBS Act.

Mark Heesen, president of the NVCA, added that,

We have been predicting an IPO pickup in the second half of 2013 and it appears as if this momentum has begun, driven by the strong biotechnology offerings… While on the surface, the low acquisitions volume thus far in 2013 could appear problematic, our market intelligence is telling us that there is a great deal of inbound interest for venture backed targets, suggesting that these companies are holding out for better pricing from strategic buyers.”

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