M&A Deals Remain Down
Strong Venture Backed IPO Pipeline
Exit Poll report by Thomson Reuters and the National Venture Capital Association ; 2013 annualized from 9.30.13
In Q3 2013, there were 107 venture backed M&A transactions with $4.9B in disclosed deal value. While up quarter on quarter, number of transactions remains down 4% on a rolling four quarter basis and disclosed value is down 22% over the same time period. However, disclosed deal value is highly dependent on the mix of M&A deals disclosed and the number of deals disclosed is also down 6% on a rolling four quarter basis.
73% of venture backed M&A transactions in Q3 2013 were in the IT industry, while 17% were Healthcare companies and the remaining 10% were in other sectors. Average disclosed deal value is down 16% on a rolling four quarter basis to $148MM. Disclosed Healthcare deals buoyed this figure averaging $195MM in Q3 2013, while disclosed IT deals averaged $135MM. The largest M&A transaction in Q3 2013 was the acquisition of Aragon Pharmaceuticals, a San Diego based developer of therapeutics for the treatment of hormone resistant cancers, by Johnson & Johnson for $650MM plus $350MM in potential earn outs. Aragon was previously backed by OrbiMed Advisors, The Column Group, Aisling Capital, Topspin Partners, and venBio.
Venture backed IPOs remained strong in Q3 2013 with 26 companies raising $2.7B, marking the first time since 2004 of two consecutive quarters with more than 20 IPOs. This represents a 33% increase in number of IPOs over the prior four quarter period and a 27% increase in dollars raised. While amount raised is not necessarily representative of the valuation of companies at IPO, 85% of the companies taken public in Q3 2013 are currently trading above their offering price.
Healthcare companies continued to constitute the majority of IPOs in Q3 2013, with Biotech companies representing 14 of the offerings, marking the first time since 2000 for two consecutive quarters of double digit Biotech IPOs. However, the largest venture backed IPO of the quarter was FireEye (FEYE), an enterprise network security company based in CA, which raised $349MM on 09/19/13. FEYE is now trading on the NASDAQ at more than twice its offering price and was previously funded by Norwest, Sequoia, and In-Q-Tel, among others. 81% of the venture backed IPOs in Q3 2013 listed on the NASDAQ, with the remainder trading on the NYSE. The number of venture backed companies that have currently filed publicly with the SEC for IPOs continued to increase to 44, which does not include companies that may have filed confidentially under the JOBS Act.
John Taylor, head of research for the NVCA, noted that,
While the number of M&A deals this quarter remains below recent run rates, the jump in the value of the deals from Q2 2013 is encouraging… On the IPO side, favorable public market conditions and stronger valuations are contributing to better quality IPOs for venture backed companies as evidenced by the jump in dollars raised on the public markets.”
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