IPO boom confirmed, M&A declines
Updated
After years of moaning about the regulatory burdens of going public, investors and entrepreneurs are taking the IPO step more frequently — and the rate of mergers and acquisitions has declined.
U.S. venture backed companies going public raised $2.73 billion in the second quarter, the highest quarterly total since 2000, according to research group VentureOne. That’s more than double $1.25 billion raised in IPOs during the same quarter last year.
In contrast, mergers and acquisitions dipped to their lowest quarterly total since 2003, with only 81 companies completing M&A transactions, for a total of $7.5 billion. That’s down from 110 transactions and $7.9 billion paid for companies in the same quarter last year.
[Update: Compellent, a Eden Prairie, Minn. company that provides enterprise-class network storage solutions, Monday became the latest to file for an IPO. Airvana, of Chelmsford, Mass., which provides network infrastructure for wireless broadband, on Monday set its IPO terms.]
For the first time since 2000, “we may be seeing a shift in exit strategy,” said Jessica Canning, director of global research for Dow Jones VentureOne.
At the same time, though, health care companies are being sold for record amounts.
From the survey:
Among the 10 technology IPOs in the second quarter, the median amount these companies raised in equity prior to going public was $67.4 million, up sharply from $39 million median in the same quarter last year. The data also found that the median pre-money valuation for a technology IPO was $452.4 million, a big improvement over the $254.4 million median in the second quarter of 2006.
Returns in the healthcare sector are booming. Companies getting bought had raised a median of $77 million in venture capital and other equity financing prior to their purchase — a record amount. However, the median amount paid for a health care company was $184 million, bested only by the $268 million median from the first quarter of 2007.
Next Story: Alternative energy companies keep coming: Zeachem, Catilin, Range Fuels, Sopogy
Previous Story: Koronis: Mutating HIV into extinction
About the Author, Matt Marshall
Matt launched VentureBeat in September of 2006, with the realization that no one else was covering the entrepreneurial and tech innovation scene with the velocity or depth that he was. Prior to founding VentureBeat, he covered venture capital for the San Jose Mercury News from 2001 to 2006. In 2002, Matt was awarded "Journalist of the Year" by the Northern California Society of Professional Journalists. Prior to working at the Merc, he was a correspondent for the Wall Street Journal in Bonn, Germany from 1995 to 1998, and a writer for the Washington Post in 1994. Matt holds a PhD in Government and an MA in German and European Studies from Georgetown University. In addition to VentureBeat, Matt is also the Executive Producer of DEMO, the leading launchpad event for emerging technologies.
