THOMSON REUTERS PLC - AMERICAN DEPOSITARY SHARES 
By NEW YORK, Oct. 1 /PRNewswire/ -- Venture-backed company exit activity showed little signs of life during the third quarter of 2009 and fell far short of historical norms, according to the Exit Poll report by Thomson Reuters and the National Venture Capital Association (NVCA).
While there were three venture-backed IPOs in Q3, a slight decline from the second quarter of 2009, the third quarter saw the largest venture backed IPO offering since March 2007. The tally of M&A exits as of the last day of the quarter was 62 totaling $1.2 billion, with average disclosed value falling back to first quarter levels.
"The fact that many in the media are classifying three IPO's as resurgence is evidence of how low our expectations have become," said Mark Heesen, president of the NVCA. "While we are encouraged by the success of the companies that have gone public, their performance has yet to translate into a filling of the pipeline. Companies simply are not registering to go public yet. On the acquisitions side, both volume and average disclosed value declined in the third quarter which is not the direction we hoped to see. While the psychology of the market is trending positive, our original forecast of a true recovery not beginning until 2010 still unfortunately holds true."
Venture-Backed Liquidity Events by Year/Quarter, 2003-2009ytd
M&A *Total *Average Average
Deals Disclosed M&A Total IPO
Total with M&A Deal **Number Offer Offer
Quarter/ M&A Disclosed Value Size of Amount Amount
Year Deals Values ($M) ($M) IPO's ($M) ($M)
2003 284 119 7,496.1 63.0 29 2,022.7 69.8
2004 346 188 16,043.8 85.3 94 11,378.0 121.0
2005 351 165 30,862.2 187.0 57 4,485.0 78.7
2006-1 106 51 5,282.5 103.6 10 540.8 54.1
2006-2 107 40 4,018.5 100.5 19 2,011.0 105.8
2006-3 94 43 3,512.0 81.7 8 934.2 116.8
2006-4 62 25 3,880.8 155.2 20 1,631.1 81.6
2006 369 159 16,693.8 105.0 57 5,117.1 89.8
2007-1 86 30 4,595.3 40.8 18 2,190.6 121.7
2007-2 87 35 3,822.3 54.4 25 4,146.8 165.9
2007-3 105 53 9,865.4 53.4 12 945.2 78.8
2007-4 94 47 9,917.8 57.1 31 3,043.8 98.2
2007 372 165 28,200.9 170.9 86 10,326.3 120.1
2008-1 108 42 5,340.3 127.2 5 282.7 56.6
2008-2 84 26 3,293.4 126.7 0 0.0 0.0
2008-3 88 32 3,080.2 96.3 1 187.5 187.5
2008-4 62 17 2,385.9 140.4 0 0.0 0.0
2008 342 117 14,099.8 120.5 6 470.2 78.4
2009-1 63 14 657.3 47.0 0 0.0 0.0
2009-2 64 13 2,570.1 197.7 5 720.7 144.1
2009-3 62 21 1,208.4 57.5 3 572.1 190.7
2009 189 48 4,435.8 92.4 8 1,292.8 161.6
Thomson Reuters & 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
There were three venture-backed IPOs valued at $572.1 million in the third quarter of 2009, a slight decline from the second quarter of 2009. With eight venture-backed initial public offerings through the first nine months of the year, 2009 has already bested the full-year 2008 total.
Two of the three IPO exits for the quarter were in the information technology sector, accounting for a total of $487.1 million. Within this sector, Massachusetts-based battery manufacturer, A123 Systems, raised $380.4 million in the largest venture-backed IPO exit of the quarter and the largest venture-backed IPO since March 2007. LogMeIn Inc, a Boston-based provider of remote access applications began trading on July 1st and raised $106.7 million in the communications and media sector.
Venture-Backed IPO Industry Breakdown
Q3 2009
*Number Total
of Venture-Backed
Venture-Backed Offering
IPO's Size
in the ($M)
Industry U.S.
Information Semiconductors/Other
Technology Elect. 1 380.4
Communications and
Media 1 106.7
TOTAL 2 487.1
Life Medical/Health 1 85.0
Sciences
TOTAL 1 85.0
TOTAL 3 572.1
*Includes all companies with at least one U.S. VC investor that trade on
U.S. exchanges, regardless of domicile
In the life sciences sector, Cumberland Pharmaceuticals, a specialty pharmaceutical company based in Nashville, Tennessee, raised $85 million via an initial public offering on NASDAQ.
There were no initial public offerings by US venture-backed companies on a foreign exchange in the third quarter.
Of the three IPOs in the third quarter, two were trading at or above their offering prices as of 9/30/2009. Eighteen venture-backed companies are currently filed for an initial public offering with the SEC.
Mergers and Acquisitions Overview
As of September 30, 2009, 62 venture-backed M&A deals were reported for the third quarter, 21 of which had an aggregate deal value of $1.2 billion. The average disclosed deal value was $57.5 million.
The information technology sector led the venture-backed M&A landscape, with 51 deals and a disclosed total dollar value of $1.1 billion. Within this sector, computer software and services and internet specific companies accounted for the bulk of the targets, with 26 and 11 transactions, respectively, across these sector subsets. The non-high technology sector saw the next highest level of activity with seven deals and a combined disclosed value of $140.4 million. Finally, life sciences deals accounted for three M&A exits with $12.1 million in disclosed values.
Venture-Backed M&A Industry Breakdown
Q3 2009
Number Number Total
of of Disclosed
Venture- Venture- Venture-
Backed Backed Backed
M&A M&A Deal
deals deals Value
with a ($M)
disclosed
Industry value
Information Communications and
Technology Media 6 1 25.0
Internet Specific 11 4 193.6
Computer Software and
Services 26 11 823.4
Semiconductors/Other
Elect. 5 2 13.9
Computer Hardware 3 - -
TOTAL 51 18 1,055.9
Life Biotechnology - - -
Sciences
Medical/Health 3 1 12.1
TOTAL 3 1 12.1
Non-High Other Products 3 1 135.0
Technology
Consumer Related - - -
Industrial/Energy 5 1 5.4
TOTAL 8 2 140.4
TOTAL 62 21 1,208.4
Source: Thomson Reuters & National Venture Capital Association
In the biggest deal of the quarter, VMWare Inc acquired SpringSource Global Inc, a San Mateo, California-based developer of open source software for $362 million. It was a tie for the next largest transactions of the quarter as McAfee Inc acquired MX Logic Inc, a developer of email protection services and Intuit Inc acquired PayCycle Inc, a provider of self-service payroll and tax management services, both in deals valued at $170 million.
Deals bringing in the top returns, those with disclosed values greater than four times the venture investment, accounted for just 10 percent of the total in the third quarter of 2009, Venture-backed M&A deals returning less than the amount invested accounted for 52 percent of the quarter's total, compared to 42 percent of the total in the previous quarter.
Analysis of Transaction Values versus
Amount Invested
Relationship between
transaction value and
investment Q109 Q209 Q309
M&A** M&A** M&A**
Deals where transaction value
is less than total venture
investment 8 5 11
Deals where transaction value
is 1-4x total venture
investment 3 2 2
Deals where transaction value
is 4x-10x total venture
investment 2 3 6
Deals where transaction value
is greater than 10x venture
investment 1 2 2
Total Disclosed Deals 14 12 21
Source: Thomson Reuters & National Venture Capital Association
** Disclosed deals that do not have a disclosed total investment
amount are not included.
About Thomson Reuters
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About National Venture Capital Association
The National Venture Capital Association (NVCA) represents more than 400 venture capital firms in the United States. 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 2008 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the United States in 2008. 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.
SOURCE Thomson Reuters
