NewswireToday - /newswire/ -
Tokyo, Chiyoda-Ku, Japan, 2011/05/16 - It's eye-opening for venture-backed M&A activity to be closer to levels seen in the first quarter of 2009, shortly after the collapse of the global financial markets, than in 2010, a year associated with recovery - NavasotaGroup.com.
Navasota Group notices that the momentum that venture-backed exits gained throughout 2010 did not continue into the new year. In the first quarter of 2011, 104 U.S.-based venture-backed companies achieved liquidity, netting $9.8 billion. That represents a 21% decrease in exits and a 17% increase in capital raised from the first quarter of 2010 when 131 exits raised $8.4 billion.
It's eye-opening for venture-backed M&A activity to be closer to levels seen in the first quarter of 2009, shortly after the collapse of the global financial markets, than in 2010, a year associated with recovery. Corporations have cash on hand and are willing to invest, but the deals aren't happening. Acquirers may feel that rising valuations have companies on the wrong side of the fine line between good deal and risky investment.
In the first quarter, corporate acquirers bought 91 companies for $8.9 billion, a 22% drop in M&A activity from the same period last year when 116 acquisitions netted $7.4 billion. M&A activity was slightly higher than the first quarter of 2009 when 83 acquisitions raised $3.3 billion.
Buyouts of venture-backed companies by private equity firms were also down from the same period last year. Private equity firms spent $128 million to buy two venture-backed companies in the most recent quarter, down significantly from the same period last year when private equity firms bought seven companies for $260 million.
The $55 million median amount paid for a venture-backed company in the most recent quarter was more than double the $21 million median in the same period last year. To achieve an M&A or buyout, venture-backed companies raised a median of $13 million in venture financing, 38% less than the same period last year, and took a median of 4.6 years to build their company, less time than the 5.1-year median in the first quarter of last year.
Eleven venture-backed companies went public in the first quarter, raising $768 million, an increase in activity from the eight IPOs that raised $711 million during the same period last year. Healthcare companies have been driving IPO activity the last six months accounting for 45% of IPOs in the most recent quarter and 57% of IPOs in the fourth quarter of 2010.
The median amount of venture capital raised prior to an IPO dropped 44% to $87 million in the first quarter of 2011. The median amount of time it took a company to reach liquidity fell to 6.2 years from 9.2 years in same period last year.
About Navasota Group
Founded in 2003, Navasota Group (navasotagroup.com) specializes in; alternative energy, biotechnology, oil and gas technology, medical devices and instrumentation, imaging and diagnostics, nanotechnology firms, heavy industry technology, and mining operations. Navasota Group funds total more than $800 million.