VC-Backed Exits in 2006: 335 M&A vs. 58 IPOs; 30% Companies Returned 10x

In U.S., 58 venture-backed IPOs raised $5.3 billion in 2006 and 335 M&A transactions generated a total disclosed value of $16.6 billion for the full year, according to Thomson Financial and the National Venture Capital Association (NVCA) report. 

In the 4th quarter, 21 venture-backed companies raised $1.835 billion through IPOs compared to 56 M&A deals.  

IPO Activity Highlights

  • The largest IPO of the fourth quarter was the $204 million offering from NewStar Financial, Inc. The perennial sector leader, 

  • Technology raised $916 million in public offerings, followed closely by the Life Sciences industry which captured $490 million. 

  • There are currently 36 venture-backed companies “in registration” with the United States Securities and Exchange Commission. 

Merger and Acquisition Overview

  • The average acquisition value for a venture-backed company, for those deals where the acquisition price was disclosed, is the highest in six years at $113.8 million per M&A deal.

  • The average disclosed deal size for the fourth quarter 2006 was $165.3 million, an improvement from third quarter 2006 and almost triple fourth quarter 2005. 

  • The Technology sector continued to dominate the venture-backed M&A landscape with 44 deals and a disclosed value of $3.2 billion. 

  • Within Technology, the Internet Specific sector had 15 transactions, followed by the Computer Software sector with 14 deals. 

  • 9 Life Sciences companies were acquired in the fourth quarter with a disclosed deal value of $141.2 million.

  • The largest disclosed deal of the quarter was the $1.65 billion acquisition of online video sharing services provider YouTube by Google. 

  • The second largest deal was Sybase, Inc.’s $425 million acquisition of Mobile 265, Inc., which provides inter-carrier messaging solutions for wireless communications.

Acquisitions which returned more than 10x the amount of the original venture investment comprised 30% of the disclosed transactions for the quarter. At the opposite end of the spectrum, 30% of the disclosed acquisition deals returned less than the total venture investment. 

More details at NVCA website

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