Chip maker Advanced Analogic Technologies, of Sunnyvale, filed yesterday to go public in an offering expected to be about $172.5 million. To our knowledge, this is the first decent-sized tech IPO Silicon Valley has had this year. We had one measly IPO during the first quarter of 2005 — Threshold Pharma, which floated only $37 million, and hasn’t done too well since. That’s compared to five local IPOs during the first quarter of last year.
We’d heard about Analogic’s likely filing a couple of months ago, during our reporting for the Battery Ventures story here, but were asked not to report it. Ken Lawler, of Battery Ventures’ Silicon Valley office, led an investment in the company (Battery has at least a 10 percent stake). We’ll be writing more about some of the reasons for the IPO decline shortly.
VentureOne’s summary about declining IPOs is in extended entry.
Mergers &Acquisitions Remain on Steady Pace but Initial Public Offerings Decline in First Quarter of 2005
Median Amount Paid for M&A Companies Reaches Four-and-a-Half-Year High, According to the Quarterly Liquidity Report From VentureOne
SAN FRANCISCO (April 1, 2005)–Seventy-nine venture-backed U.S. companies were acquired in the first quarter of 2005, with a total amount paid of approximately $7.07 billion, according to the Quarterly Liquidity Report from VentureOne, a unit of Dow Jones Newswires and the publisher of VentureSource. The amount is the highest aggregate paid for venture-backed mergers and acquisitions (M&As) in four years, although the number of M&A deals declined from the 102 completed in the first quarter of 2004.
The first quarter proved to be a slower period for venture-backed initial public offerings (IPOs), with eight completed, raising a total of $371.1 million. This is the fewest number of IPOs in a single quarter since the third quarter of 2003 and the fewest dollars raised in the public markets since the second quarter of that year.
ï¿½Mergers and acquisitions remain the most viable exit strategy for venture-backed companies,ï¿½ said John Gabbert, vice president of worldwide research for VentureOne. ï¿½The relatively higher prices paid for these acquisitions indicate that acquirers recognize the value in these companies, more than half of which were initially financed between 1999 and 2001.ï¿½
The median amount paid in an M&A this year was $60 million, the highest on record since the third quarter of 2000. This compares to $24.4 million, which is the median amount invested prior to acquisition this quarter.
The age of companies being acquired grew to 5.2 years this quarter, from 4.1 years in the first quarter of 2004.
Of the 79 M&As completed in the first quarter, 45 of them were in the information technology (IT) industry, while the health-care and products and services industries represented 17 apiece. However, the largest M&A of the quarter was for a health care company: the $527 million acquisition of biotechnology company Angiosyn by Pfizer (NYSE: PFE).
Only one IT company, Fusion Telecommunications International (AMEX: FSN), exited via an IPO this quarter. Instead, IPO activity was once again dominated by health-care companies, which represented five of the IPOs this quarter. Of those, four were in the biopharmaceutical segment; the remaining health-care IPO was in the medical software and information services segment. Nine life-sciences or medical devices companies registered for an IPO this quarter, bringing the total number of venture-backed health-care companies currently in registration to 17.
The largest IPO of the quarter was GFI Group (Nasdaq: GFIG), a provider of brokerage services and data, which raised $82.9 million for the company in its January public offering.
The median premoney valuation for an IPO this quarter was $150.5 million, the lowest premoney valuation since 2002. The median amount of equity raised prior to the offering was $56 million, which is lower than the $90.7 million median from the first quarter of 2004. The median age of the companies that completed IPOs this quarter was 4.9 years, about the same as companies completing IPOs in the first quarter of 2004.
The investment figures included in this release are based on aggregate findings of VentureOneï¿½s proprietary U.S. research. This data was collected by surveying professional venture capital firms, through in-depth interviews with company CEOs and CFOs, and from secondary sources. These venture capital statistics are for equity investments into early-stage, innovative companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice. Copyright ï¿½ 2005, VentureOne.
Dow Jones VentureOne (www.ventureone.com), a unit of Dow Jones Newswires, has been the leading provider of finance and investment data to the venture capital industry for almost 20 years. Dow Jones VentureSource, a sophisticated electronic database on the venture capital industry, is published by VentureOne.
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