With another quarter under our belts, it’s time again to reflect on how the market is faring for technology exits in North America.

In general, the IPO market seems to be doing well, with the number of transactions rebounding from the first quarter low and investor returns continuing to outperform the broader market. As for M&A, we’ve seen a large drop off in the dollar volume of transactions for the first half of 2017, but the number of overall transactions is still relatively strong.

So, let’s delve a little deeper into both markets below.

The IPO market

As you can see from the chart below, we saw a rebound in the number of technology IPOs that took place in the second quarter up from only four transactions in the first quarter to eight transactions in the second quarter – an encouraging sign. While the overall proceeds were down quarter over quarter, that’s because Snap’s first quarter IPO of $3.4 billion distorted the trend somewhat and made up over 85 percent of the first quarter deal proceeds.

Above: Data source: CapitalIQ

Another couple of metrics I typically look at to gauge the health of the IPO market is how transactions have priced versus the filing range and how they have performed since IPO. Pricing versus the filing range compares the IPO price to the initial range the transaction was marketed at – all IPOs in North America start their roadshow with a price range at which they intend to sell the deal. If a transaction prices above this range it is obviously a positive sign (investor reception was better than expected), and if it prices below it’s an indication there wasn’t enough investor demand at the initial expected price range.

As you can see from the table below, the quarter started off strong, with three transactions pricing above their range (Okta, Yext, and Cloudera). However, as the quarter went on we saw three out of five transactions price within the range and two pricing below the range.

While this might appear neutral to negative for the overall IPO market, it is important to also look at investor performance over the period as a second indicator of market health. As you can see below, the median performance across all second quarter IPOs was extremely healthy, posting a return of 18.7 percent — much higher than the overall market performance over the same period.

Above: Data source: CapitalIQ and Sec.gov

The M&A market

After an extremely robust M&A market in 2016, we have seen a material drop-off in the tech M&A market in 2017, with only $48 billion in transactions year-to-date, as you can see below.

Above: Data source: CapitalIQ

However, by looking only at the number of dollars going into M&A we are distorting the picture somewhat. The number of transactions so far this year has been much more in line with the ~600 we have seen per quarter in 2016. So this tells us the M&A market remains relatively healthy and there really hasn’t been a material drop-off in activity. The chart below shows the largest transactions in 2017 vs. 2016. As you can see, there were some very large transactions in 2016, which significantly skewed the size of the M&A market. Those types of deals simply haven’t taken place yet in 2017.

Above: Data source: CapitalIQ

So while the dollars going into tech M&A have declined significantly, it’s the absence of the blockbuster transactions that has brought this number down, not a significant drop-off in overall deal activity. As such, I am encouraged that the remainder of the year will be equally as strong.

Ed Bryant is President and CEO of Sampford Advisors, an M&A advisory firm for Canadian technology companies. Ed has over 20 years of experience, including over 17 years in investment banking with Deutsche Bank, Morgan Stanley, and Sampford in Hong Kong, Singapore, New York, and now Ottawa. In that time, he has raised in excess of $20 billion in equity and debt capital and completed over $10 billion in M&A transactions.