M&A Volume is Conversely Down
Healthcare Leads IPOs, while IT Leads M&A
In Q4 2013, there were 81 venture backed M&A transactions with $5.3B in disclosed deal value. While disclosed deal value increased this quarter, the number of transactions and total disclosed deal value are down 23% and 35%, respectively, over 2012. However, disclosed deal value is highly dependent on the mix of M&A deals disclosed and the number of deals disclosed is similarly down 31% from 2012.
81% of venture backed M&A transactions in Q4 2013 were in the IT industry, while 11% were Healthcare companies and the remaining 10% were in other sectors. Average disclosed deal value is down 6% from 2012 to $161.4MM for 2013. Disclosed IT deals buoyed this figure averaging $194MM in Q4 2013, while disclosed Healthcare deals averaged $131MM. The largest M&A transaction in Q4 2013 was the acquisition of Climate Corp., a San Francisco based provider of weather risk technology services, by Monsanto for $930MM. Climate Corp. was previously backed by Atomico, First Round, Founders Fund, Glynn, Google Ventures, Index, Khosla, and NEA, among others.
Venture backed IPOs remained strong in Q4 2013 with 24 companies raising $5.3B, making 2013 the best year by number of IPOs since 2007. This represents a 67% increase in number of IPOs over 2012, but a 48% decrease in dollars raised. However, adjusting for the $16.0B Facebook IPO in 2012 and the $2.1B Twitter IPO in 2013, dollars raised would have increased 68% year on year. While amount raised is not necessarily representative of the valuation of companies at IPO, 92% of the companies taken public in Q4 2013 are currently trading above their offering price.
Healthcare companies continued to comprise the largest industry segment of IPOs in Q4 2013, representing 11 of the 24 offerings. However, the largest venture backed IPO of the quarter was Twitter Inc (TWTR), which raised $2.1B on 11/06/13. TWTR is now trading on the NYSE at more than twice its offering price. 16 of the venture backed IPOs in Q4 2013 listed on the NASDAQ, while 11 listed on the NYSE and one listed Over-the-Counter. The number of venture backed companies that have currently filed publicly with the SEC for IPOs continued to increase to 52, which does not include companies that may have filed confidentially under the JOBS Act.
John Taylor, head of research for the NVCA, added that,
IPO activity for venture-backed companies continues to improve. The biotech sector is especially notable because it made up over half of the 2013 IPOs, which is more than the previous five years combined. The on-ramp provision of the JOBS Act is likely a significant contributor to this shift and the venture industry overall remains hopeful that IPO and M&A levels will further strengthen as the bulging pipeline of mature companies awaits favorable market conditions.”
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