Deals & More

With five venture-backed public offerings, the second quarter was a significant improvement over the first quarter’s zero IPOs. In fact, this is the best the market has performed since the first quarter of 2008. That said, the number still comes in well under historical norms, reports the National Venture Capital Association (.doc).

So what’s the takeaway? The exit market is slowly but surely crawling back, but it has a ways to go before it can be considered healthy. The same is seen in merger and acquisition activity. The second quarter saw 59 deals, with the 13 disclosing values adding up to $2.6 billion. The number of deals is fairly level with the two preceding quarters (which saw 62 each), but average dollar amounts were a tick higher — also suggesting a sluggish improvement.

Here’s a comprehensive chart (courtesy of the NVCA report) showing how the exit market has evolved in the past several years — indicating exactly how damaging the downturn was:

Second quarter’s five IPOs have been very successful, adding up to $720.7 million. Apparently, this is the highest dollar value achieved since the fourth quarter of 2007, according to the NVCA. All were traded at or above their set offering prices. Four of the five were in the information technology space: SolarWinds, OpenTable, MediData Solutions and Bridgepoint Education. DigitalGlobe was the odd man out, fitting more in the communications sector — but its sale was the most lucrative at $279.3 million. Despite these victories, many companies remain skittish about jumping into the IPO game, with only 10 currently filed with the Securities and Exchange Commission. There was a flurry of filing withdrawals last fall and early this year.

Information technology also took the cake in the M&A category, with 46 of the 59 deals. Life sciences came in second with seven deals — including the largest of the quarter: Medtronic’s acquisition of surgical equipment provider Corevalve, valued at $700 million. About 42 percent of the M&A deals struck during the second quarter provided returns that were four times the initial venture investment. In the first quarter, these deals accounted for only 21 percent.

All of this data bodes well for the third and fourth quarters this year, especially considering the government stimulus funding earmarked for the cleantech and life science sectors.

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