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Venture Capitalist Exit Market Doing Well in Q2, 2009

Venture Capitalist Exit Market Doing Well in Q2, 2009

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Published by Dan Primack

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Published by: Dan Primack on Jul 01, 2009
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Venture-Backed Exit Market Shows Signs of Life in Second Quarter Five IPOs Brought to Market for the First Time Since First Quarter 2008New York, New York, July 1, 2009 –
Venture-backed company exit activity showed mildimprovement in the second quarter of 2009 but still fell far short of historical norms,according to the Exit Poll report by Thomson Reuters and the National Venture CapitalAssociation (NVCA). There were five venture-backed IPOs for the quarter, the highestnumber since the first quarter of 2008. The tally of M&A exits as of the last day of thequarter was 59 totaling $2.6 billion, similar to the level of activity across the two prior quarters but considerably higher in average disclosed value.“The fact that several venture-backed companies successfully entered the public marketsand performed well is encouraging,” said Mark Heesen, president of NVCA. “However, weremain concerned about the extremely thin pipeline of companies in registration as itindicates that it will be some time before we can even be in a position to return to healthyIPO activity levels.”
CONTACTS
Emily MendellNVCA1.610.565.3904emendell@nvca.orgSandy AnglinThomson Reuters, Research Analyst1.646 223 6997sandy.anglin@thomsonreuters.comSandra LeeThomson Reuters, Public Relations1.646 223 5292sandra.lee@thomsonreuters.com
 
Venture-Backed Liquidity Events by Year/Quarter, 2003-2009ytd
Quarter/YearTotalM&ADealsM&ADeals withDisclosedValues*TotalDisclosedM&AValue($M)*AverageM&ADeal Size($M)**Numberof IPO'sTotalOfferAmount($M)AverageIPO OfferAmount($M)20032841197,496.163.0292,022.769.8200434618816,043.885.39411,378.0121.0200535016417,342.5105.8574,485.078.72006-1
107525,607.5107.810540.854.1
2006-2
107404,018.5100.5192,011.0105.8
2006-3
94433,512.081.78934.2116.8
2006-4
63265,630.8216.6201,631.181.6
200637116118,768.8116.6575,117.189.82007-1
88314,640.3149.7182,190.6121.7
2007-2
88363,910.3108.6254,146.8165.9
2007-3
1065411,203.7207.512945.278.8
2007-4
93469,725.8211.4313,043.898.2
200737516729,480.2176.58610,326.3120.12008-1
108424,885.2116.35282.756.6
2008-2
84263,293.4126.700.00.0
2008-3
88323,080.296.31187.5187.5
2008-4
62172,385.9140.400.00.0
200834211713,644.7116.66470.278.42009-1
6214657.347.000.00.0
2009-2
59132,570.1197.75720.7144.1
2009121273,227.4119.55720.7144.1
Thomson Reuters & National Venture Capital Association*Only accounts for deals with disclosed values**Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile.
IPO Activity Overview
There were five venture-backed IPOs valued at $720.7 million in the second quarter of 2009, the most offerings since the first quarter of 2008 (also five) and the highest dollar volume since the fourth quarter of 2007 ($3.0 billion).Four of the five IPO exits for the quarter were in the information technology sector,accounting for $579.0 million. Within this sector, computer software and servicescompanies garnered the most deals, with two, while the largest dollar volume wasassociated with the communications and media related-transaction worth $279.3 million.
Page 2 of 5July 1, 2009
 
There was one non-high technology deal by a consumer related venture-backed companyfor $141.8 million.
Venture-Backed IPO Industry Breakdown
 
Q2 2009
Industry*Numberof Venture-BackedIPO's inthe U.S.TotalVenture-BackedOfferingSize($M)InformationTechnology
Computer Software and Services2239.7Communications and Media1279.3Computer Hardware160.0
TOTAL4579.0Non-HighTechnology
Consumer Related1141.8
TOTAL1141.8TOTAL5720.7
*Includes all companies with at least one U.S. VC investor that trade on U.S.exchanges, regardless of domicile
The largest transactions of the quarter were a $279.3 million issue from Colorado-basedearth imaging company DigitalGlobe in May followed by a $151.5 million offering fromTexas-based network management company SolarWinds in the same month.In addition to domestic activity, there was one offering by a US venture-backed companyon a foreign exchange in the second quarter. California-based information retrievalservices company Array Networks went public on the Taiwan stock exchange in May.Of the five IPOs in the second quarter, all were trading at or above their offering prices asof 6/30/2009. Only ten venture-backed companies are currently filed for an initial publicoffering with the SEC.
Mergers and Acquisitions Overview
As of June 30, 2009, 59 venture-backed M&A deals were reported for the first quarter, 13of which had an aggregate deal value of $2.6 billion. The average disclosed deal valuewas $197.7 million, the highest level since the fourth quarter of 2007.The information technology sector led the venture-backed M&A landscape, with 46 dealsand a disclosed total dollar value of $215.6 million. Within this sector, internet specific andcomputer software and services companies accounted for the bulk of the targets, with 17and 13 transactions, respectively, across these sector subsets. Life sciences saw the nexthighest level of activity with seven deals and a combined disclosed value of $1.4 billion.Finally, non-high technology deals accounted for six exits with $990.0 million in disclosedvalues.
Venture-Backed M&A Industry Breakdown
Page 3 of 5July 1, 2009

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