Venture-Backed IPOs Continue to Make Gains While Acquisition Activity Declines in Q2 2007

Jul 02, 2007, 01:00 ET from Thomson Financial from ,The National Venture Capital Association

    NEW YORK, July 2 /PRNewswire-FirstCall/ -- Twenty-six venture backed
 companies raised $4.27 billion through initial public offerings (IPOs) on
 US exchanges in the second quarter of 2007, according to the Exit Poll
 report by Thomson Financial and the National Venture Capital Association
 (NVCA). This dollar volume represents 112 percent increase from the second
 quarter of 2006 when nineteen venture-backed companies went public raising
 $2 billion. Venture-backed merger and acquisition activity declined with 67
 transactions completed this quarter compared to 95 in the second quarter of
 2006.
     "The recent improvements in the IPO market cannot totally offset the
 low M&A volume this quarter," said Mark Heesen, president, National Venture
 Capital Association. "However, company quality continues to be strong and
 there is a large backlog of maturing companies awaiting an initial public
 offering or acquisition. Most venture investments exit through
 acquisitions, so it's important that this market remain vibrant. This
 softness may reflect some digestion issues on behalf of the large
 acquirers. Once some larger deals move through, we hope to see the volume
 rebound in the second half of the year," Heesen added.
     Venture-Backed Liquidity Events by Year/Quarter, 2001-2007ytd
 
                                *Total
                        M&A    Disclosed *Average           Total    Average
               Total Deals with  M&A       M&A              Offer   IPO Offer
     Quarter    M&A  Disclosed  Value   Deal Size **Number  Amount   Amount
      /Year    Deals  Values    ($M)      ($M)    of IPOs   ($M)      ($M)
 
     2001       353    165     16,798.9   101.8     41     3,489.9    85.1
     2002       318    152      7,916.4    52.1     22     2,109.1    95.9
     2003       291    123      7,726.1    62.8     29     2,022.7    69.8
     2004-1      80     45      3,921.0    87.1     13     2,721.1   209.3
     2004-2      89     48      4,514.6    94.1     29     2,077.8    71.7
     2004-3      86     47      4,142.8    88.2     24     3,225.6   134.4
     2004-4      84     46      2,862.2    62.2     27     2,990.4   110.8
     2004       339    186     15,440.6    83.0     93    11,014.9   118.4
     2005-1      82     46      4,364.9    94.9     10       720.7    72.1
     2005-2      80     36      4,791.0   133.1     10       714.1    71.4
     2005-3      98     47      4,374.8    93.1     19     1,458.1    76.7
     2005-4      87     39      2,563.7    65.7     17     1,568.1    92.2
     2005       347    168     16,094.4    95.8     56     4,461.0    79.7
     2006-1     104     48      5,384.4   112.2     10       540.8    54.1
     2006-2      95     37      3,747.6   101.3     19     2,011.0   105.8
     2006-3      89     40      3,728.8    93.2      8       934.2   116.8
     2006-4      59     24      3,814.8   159.0     20     1,631.1    81.6
     2006       347    149     16,675.5   111.9     57     5,117.1    89.8
     2007-1      77     28      4,537.3   162.1     18     2,190.6   121.7
     2007-2      67     28      2,685.4    99.8     26     4,272.7   164.3
     2007       144     56      7,222.7   129.0     44     6,463.3   146.9
 
          Thomson Financial & 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
     The Technology sector saw thirteen IPOs come to market raising over
 $2.5 billion during the second quarter, bolstered by the April 19th issue
 of MetroPCS Communications, the third largest venture-backed offering of
 all time. Led by Bear Stearns, Bank of America, Merrill Lynch, and Morgan
 Stanley, the 50 million share listing was priced at $23 per share for a
 total offer value of $1.15 billion. Venture investors in the company
 include TA Associates, Inc., Accel Partners, M/C Venture Partners, and
 Flagship Ventures.
     The Life Sciences industry accounted for 42 percent of venture-backed
 IPO activity during the second quarter of 2007. The largest IPO in this
 sector was the May 9th issue of TomoTherapy, Inc. The precise radiation
 technology development company listed 11.7 million shares at $19 per share
 for a total offer value of $223.1 million, making it the fourth largest
 Life Sciences issue of all time. The IPO was managed by Merrill Lynch and
 key venture investors in the company include Ascension Health Ventures LLC,
 Endeavor Capital Management, Venture Investors LLC, the State of Wisconsin
 Investment Board, and Advantage Capital Partners.
     "The high dollar volume of Technology venture-backed offerings is
 encouraging for other Technology companies in the pipeline", said Alex Tan,
 Global Private Equity Research Manager at Thomson Financial. "If
 year-to-date volume is any indication of the rest of the year, 2007 should
 be a noteworthy year for venture-backed IPOs in the sector."
     Venture-Backed IPO Industry Breakdown
                                                          Q2 2007
                                                 *Number
                                                    of            Total
                                                 Venture-        Venture-
                                                  Backed          Backed
                                                 IPOs in        Offering
                        Industry                 the U.S.        Size ($M)
 
                      Internet Specific             3              427.6
                      Communications/Media          3             1348.4
                      Computer Software             3              281.4
                      Semiconductors                4              481.5
         Technology   TOTAL                        13            2,538.9
                      Medical/Health                7              709.6
         Life         Biotechnology                 4              223.7
         Sciences     TOTAL                        11              933.3
                      Other Products                2              800.5
         Other        TOTAL                         2              800.5
                                        TOTAL      26             4272.7
 
          *Includes all companies with at least one U.S. VC investor that trade
           on U.S. exchanges, regardless of domicile
     The Boston and San Jose metropolitan regions were home to the most
 venture-backed companies with IPO exits in 2Q 2007. In Boston, three
 companies focused in Life Sciences, two in Technology, and one in Clean
 Tech. In San Jose there were four Technology and two Life Sciences issues.
 Dallas, city of headquarters for MetroPCS, realized the highest dollar
 volume of offerings from the one issue.
     2Q 2007 Venture-Backed IPO Metro Region Breakdown
 
                             *Number of  Total              Venture-
                              Venture-Backed             Backed Offering
     Metro Region            IPOs in the U.S.              Size ($M)
 
         Boston                     6                          548.1
         San Jose                   6                          608.0
         Other US                   3                          545.6
         New York Metro             2                          170.4
         South NJ/West Pa           2                          120.0
         Dallas                     1                         1150.0
         Houston                    1                           75.1
         Los Angeles                1                          703.0
         Non US                     1                          125.9
         Washington                 1                           87.5
         Denver                     1                           55.1
         San Diego Metro            1                           84.0
         TOTAL                     26                         4272.7
 
     *Includes all companies with at least one U.S. VC investor that trade on
      U.S. exchanges, regardless of domicile
     As of June 27, 2007, 69% of the venture-backed companies that went
 public during the rolling twelve month period were trading at or above
 their offering price.
     Forty venture-backed companies have filed for an initial public
 offering with the SEC since 2006 and are currently "in registration." This
 marks a slight decrease from the 41 companies in registration at the end of
 the second quarter of 2006. There were 44 ventured-backed companies in the
 registration pipeline at end of Q1 2007 and 36 at the end of calendar year
 2006.
     In addition to the U.S. market activity, Australian pharmaceutical
 company, QRxPharma Ltd. listed on the Australian Stock Exchange and was the
 only company backed by U.S. venture financing to go public on a non-U.S.
 exchange during the first quarter.
     Merger and Acquisition Overview
     Venture-backed merger and acquisition exits declined from the previous
 quarter and 2Q 2006. The Technology sector dominated the venture-backed M&A
 landscape, with 52 deals and a disclosed value of approximately $1.7
 billion. Within Technology, the Computer Software and Internet Specific
 industries saw 21 and 18 transactions, respectively. The Computer Software
 sector reached $822.3 million in disclosed deal value - 50 percent of the
 overall value within Technology. Eight Life Sciences companies were
 acquired, with a disclosed deal value of $807 million.
     Venture-Backed M&A Industry Breakdown
 
                                                   Q2 2007
 
                                                       Number of       Total
                                                        Venture-     Disclosed
                                         Number of     Backed M&A     Venture-
                                          Venture-     deals with      Backed
                                          Backed      a disclosed    Deal Value
                   Industry              M&A deals       value          ($M)
 
                Communications/Media         7             5             285.8
                Internet Specific            18            4             344.0
                Computer Software            21            9             822.3
                Semiconductors                3            2             198.0
                Computer Hardware             3            0               0.0
    Technology  TOTAL                        52           20           1,650.1
                Medical/Health                5            4             417.0
                Biotechnology                 3            2             390.0
    Life
    Sciences    TOTAL                         8            6             807.0
                Other Products                7            2             228.2
                TOTAL                         7            2             228.2
                          TOTAL              67           28           2,685.3
 
     Source: Thomson Financial & National Venture Capital Association
     The largest disclosed deal of the quarter was the $500.3 million
 acquisition of financial analytic software developer OutlookSoft by Systeme
 Anwendungen Produkte in June. The second largest deal was the $325 million
 acquisition of biotechnology company Morphotek by Eisai Inc.
     Deals bringing in the top returns, those with disclosed values greater
 than four times the venture investment, accounted for 22 percent of the
 total compared to 39 percent last quarter. Conversely, those deals
 returning less than the amount invested accounted for 48 percent of the
 quarter's total, up from 25 percent of the total last quarter.
     Analysis of Transaction Values versus Amount Invested
 
     Relationship between transaction value                Q107         Q207
      and investment                                       M&A**        M&A**
     -------------------------------------------------------------------------
     Deals where transaction value is less than total
      venture investment                                     7            13
 
     Deals where transaction value is 1-4x total
      venture investment                                    10             8
 
     Deals where transaction value is 4x-10x total
      venture investment                                     5             5
 
     Deals where transaction value is greater than
      10x venture investment                                 6             1
 
     Total Disclosed Deals                                  28            27
 
     Source: Thomson Financial & National Venture Capital Association
 
     ** Disclosed deals that do not have a disclosed total investment amount
     are not included.
     About Thomson Financial
     Thomson Financial, with 2006 revenues of US$2 billion, is a provider of
 information and technology solutions to the worldwide financial community.
 Through the widest range of products and services in the industry, Thomson
 Financial helps clients in more than 70 countries make better decisions, be
 more productive and achieve superior results. Thomson Financial is part of
 The Thomson Corporation (http://www.thomson.com), a global leader in
 providing essential electronic workflow solutions to business and
 professional customers. With operational headquarters in Stamford, Conn.,
 Thomson provides value-added information, software tools and applications
 to professionals in the fields of law, tax, accounting, financial services,
 scientific research and healthcare. The Corporation's common shares are
 listed on the New York and Toronto stock exchanges (NYSE:   TOC; TSX: TOC).
     The National Venture Capital Association (NVCA) represents
 approximately 480 venture capital and private equity firms. NVCA's mission
 is to foster greater understanding of the importance of venture capital to
 the U.S. economy, and support entrepreneurial activity and innovation.
 According to a 2006 Global Insight study, venture-backed companies
 accounted for 10 million jobs and $2.1 trillion in revenue in the United
 States in 2005. The NVCA represents the public policy interests of the
 venture capital community, strives to maintain high professional standards,
 provides reliable industry data, sponsors professional development, and
 facilitates interaction among its members. For more information about the
 NVCA, please visit http://www.nvca.org.
 
 

SOURCE Thomson Financial; The National Venture Capital Association
    NEW YORK, July 2 /PRNewswire-FirstCall/ -- Twenty-six venture backed
 companies raised $4.27 billion through initial public offerings (IPOs) on
 US exchanges in the second quarter of 2007, according to the Exit Poll
 report by Thomson Financial and the National Venture Capital Association
 (NVCA). This dollar volume represents 112 percent increase from the second
 quarter of 2006 when nineteen venture-backed companies went public raising
 $2 billion. Venture-backed merger and acquisition activity declined with 67
 transactions completed this quarter compared to 95 in the second quarter of
 2006.
     "The recent improvements in the IPO market cannot totally offset the
 low M&A volume this quarter," said Mark Heesen, president, National Venture
 Capital Association. "However, company quality continues to be strong and
 there is a large backlog of maturing companies awaiting an initial public
 offering or acquisition. Most venture investments exit through
 acquisitions, so it's important that this market remain vibrant. This
 softness may reflect some digestion issues on behalf of the large
 acquirers. Once some larger deals move through, we hope to see the volume
 rebound in the second half of the year," Heesen added.
     Venture-Backed Liquidity Events by Year/Quarter, 2001-2007ytd
 
                                *Total
                        M&A    Disclosed *Average           Total    Average
               Total Deals with  M&A       M&A              Offer   IPO Offer
     Quarter    M&A  Disclosed  Value   Deal Size **Number  Amount   Amount
      /Year    Deals  Values    ($M)      ($M)    of IPOs   ($M)      ($M)
 
     2001       353    165     16,798.9   101.8     41     3,489.9    85.1
     2002       318    152      7,916.4    52.1     22     2,109.1    95.9
     2003       291    123      7,726.1    62.8     29     2,022.7    69.8
     2004-1      80     45      3,921.0    87.1     13     2,721.1   209.3
     2004-2      89     48      4,514.6    94.1     29     2,077.8    71.7
     2004-3      86     47      4,142.8    88.2     24     3,225.6   134.4
     2004-4      84     46      2,862.2    62.2     27     2,990.4   110.8
     2004       339    186     15,440.6    83.0     93    11,014.9   118.4
     2005-1      82     46      4,364.9    94.9     10       720.7    72.1
     2005-2      80     36      4,791.0   133.1     10       714.1    71.4
     2005-3      98     47      4,374.8    93.1     19     1,458.1    76.7
     2005-4      87     39      2,563.7    65.7     17     1,568.1    92.2
     2005       347    168     16,094.4    95.8     56     4,461.0    79.7
     2006-1     104     48      5,384.4   112.2     10       540.8    54.1
     2006-2      95     37      3,747.6   101.3     19     2,011.0   105.8
     2006-3      89     40      3,728.8    93.2      8       934.2   116.8
     2006-4      59     24      3,814.8   159.0     20     1,631.1    81.6
     2006       347    149     16,675.5   111.9     57     5,117.1    89.8
     2007-1      77     28      4,537.3   162.1     18     2,190.6   121.7
     2007-2      67     28      2,685.4    99.8     26     4,272.7   164.3
     2007       144     56      7,222.7   129.0     44     6,463.3   146.9
 
          Thomson Financial & 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
     The Technology sector saw thirteen IPOs come to market raising over
 $2.5 billion during the second quarter, bolstered by the April 19th issue
 of MetroPCS Communications, the third largest venture-backed offering of
 all time. Led by Bear Stearns, Bank of America, Merrill Lynch, and Morgan
 Stanley, the 50 million share listing was priced at $23 per share for a
 total offer value of $1.15 billion. Venture investors in the company
 include TA Associates, Inc., Accel Partners, M/C Venture Partners, and
 Flagship Ventures.
     The Life Sciences industry accounted for 42 percent of venture-backed
 IPO activity during the second quarter of 2007. The largest IPO in this
 sector was the May 9th issue of TomoTherapy, Inc. The precise radiation
 technology development company listed 11.7 million shares at $19 per share
 for a total offer value of $223.1 million, making it the fourth largest
 Life Sciences issue of all time. The IPO was managed by Merrill Lynch and
 key venture investors in the company include Ascension Health Ventures LLC,
 Endeavor Capital Management, Venture Investors LLC, the State of Wisconsin
 Investment Board, and Advantage Capital Partners.
     "The high dollar volume of Technology venture-backed offerings is
 encouraging for other Technology companies in the pipeline", said Alex Tan,
 Global Private Equity Research Manager at Thomson Financial. "If
 year-to-date volume is any indication of the rest of the year, 2007 should
 be a noteworthy year for venture-backed IPOs in the sector."
     Venture-Backed IPO Industry Breakdown
                                                          Q2 2007
                                                 *Number
                                                    of            Total
                                                 Venture-        Venture-
                                                  Backed          Backed
                                                 IPOs in        Offering
                        Industry                 the U.S.        Size ($M)
 
                      Internet Specific             3              427.6
                      Communications/Media          3             1348.4
                      Computer Software             3              281.4
                      Semiconductors                4              481.5
         Technology   TOTAL                        13            2,538.9
                      Medical/Health                7              709.6
         Life         Biotechnology                 4              223.7
         Sciences     TOTAL                        11              933.3
                      Other Products                2              800.5
         Other        TOTAL                         2              800.5
                                        TOTAL      26             4272.7
 
          *Includes all companies with at least one U.S. VC investor that trade
           on U.S. exchanges, regardless of domicile
     The Boston and San Jose metropolitan regions were home to the most
 venture-backed companies with IPO exits in 2Q 2007. In Boston, three
 companies focused in Life Sciences, two in Technology, and one in Clean
 Tech. In San Jose there were four Technology and two Life Sciences issues.
 Dallas, city of headquarters for MetroPCS, realized the highest dollar
 volume of offerings from the one issue.
     2Q 2007 Venture-Backed IPO Metro Region Breakdown
 
                             *Number of  Total              Venture-
                              Venture-Backed             Backed Offering
     Metro Region            IPOs in the U.S.              Size ($M)
 
         Boston                     6                          548.1
         San Jose                   6                          608.0
         Other US                   3                          545.6
         New York Metro             2                          170.4
         South NJ/West Pa           2                          120.0
         Dallas                     1                         1150.0
         Houston                    1                           75.1
         Los Angeles                1                          703.0
         Non US                     1                          125.9
         Washington                 1                           87.5
         Denver                     1                           55.1
         San Diego Metro            1                           84.0
         TOTAL                     26                         4272.7
 
     *Includes all companies with at least one U.S. VC investor that trade on
      U.S. exchanges, regardless of domicile
     As of June 27, 2007, 69% of the venture-backed companies that went
 public during the rolling twelve month period were trading at or above
 their offering price.
     Forty venture-backed companies have filed for an initial public
 offering with the SEC since 2006 and are currently "in registration." This
 marks a slight decrease from the 41 companies in registration at the end of
 the second quarter of 2006. There were 44 ventured-backed companies in the
 registration pipeline at end of Q1 2007 and 36 at the end of calendar year
 2006.
     In addition to the U.S. market activity, Australian pharmaceutical
 company, QRxPharma Ltd. listed on the Australian Stock Exchange and was the
 only company backed by U.S. venture financing to go public on a non-U.S.
 exchange during the first quarter.
     Merger and Acquisition Overview
     Venture-backed merger and acquisition exits declined from the previous
 quarter and 2Q 2006. The Technology sector dominated the venture-backed M&A
 landscape, with 52 deals and a disclosed value of approximately $1.7
 billion. Within Technology, the Computer Software and Internet Specific
 industries saw 21 and 18 transactions, respectively. The Computer Software
 sector reached $822.3 million in disclosed deal value - 50 percent of the
 overall value within Technology. Eight Life Sciences companies were
 acquired, with a disclosed deal value of $807 million.
     Venture-Backed M&A Industry Breakdown
 
                                                   Q2 2007
 
                                                       Number of       Total
                                                        Venture-     Disclosed
                                         Number of     Backed M&A     Venture-
                                          Venture-     deals with      Backed
                                          Backed      a disclosed    Deal Value
                   Industry              M&A deals       value          ($M)
 
                Communications/Media         7             5             285.8
                Internet Specific            18            4             344.0
                Computer Software            21            9             822.3
                Semiconductors                3            2             198.0
                Computer Hardware             3            0               0.0
    Technology  TOTAL                        52           20           1,650.1
                Medical/Health                5            4             417.0
                Biotechnology                 3            2             390.0
    Life
    Sciences    TOTAL                         8            6             807.0
                Other Products                7            2             228.2
                TOTAL                         7            2             228.2
                          TOTAL              67           28           2,685.3
 
     Source: Thomson Financial & National Venture Capital Association
     The largest disclosed deal of the quarter was the $500.3 million
 acquisition of financial analytic software developer OutlookSoft by Systeme
 Anwendungen Produkte in June. The second largest deal was the $325 million
 acquisition of biotechnology company Morphotek by Eisai Inc.
     Deals bringing in the top returns, those with disclosed values greater
 than four times the venture investment, accounted for 22 percent of the
 total compared to 39 percent last quarter. Conversely, those deals
 returning less than the amount invested accounted for 48 percent of the
 quarter's total, up from 25 percent of the total last quarter.
     Analysis of Transaction Values versus Amount Invested
 
     Relationship between transaction value                Q107         Q207
      and investment                                       M&A**        M&A**
     -------------------------------------------------------------------------
     Deals where transaction value is less than total
      venture investment                                     7            13
 
     Deals where transaction value is 1-4x total
      venture investment                                    10             8
 
     Deals where transaction value is 4x-10x total
      venture investment                                     5             5
 
     Deals where transaction value is greater than
      10x venture investment                                 6             1
 
     Total Disclosed Deals                                  28            27
 
     Source: Thomson Financial & National Venture Capital Association
 
     ** Disclosed deals that do not have a disclosed total investment amount
     are not included.
     About Thomson Financial
     Thomson Financial, with 2006 revenues of US$2 billion, is a provider of
 information and technology solutions to the worldwide financial community.
 Through the widest range of products and services in the industry, Thomson
 Financial helps clients in more than 70 countries make better decisions, be
 more productive and achieve superior results. Thomson Financial is part of
 The Thomson Corporation (http://www.thomson.com), a global leader in
 providing essential electronic workflow solutions to business and
 professional customers. With operational headquarters in Stamford, Conn.,
 Thomson provides value-added information, software tools and applications
 to professionals in the fields of law, tax, accounting, financial services,
 scientific research and healthcare. The Corporation's common shares are
 listed on the New York and Toronto stock exchanges (NYSE:   TOC; TSX: TOC).
     The National Venture Capital Association (NVCA) represents
 approximately 480 venture capital and private equity firms. NVCA's mission
 is to foster greater understanding of the importance of venture capital to
 the U.S. economy, and support entrepreneurial activity and innovation.
 According to a 2006 Global Insight study, venture-backed companies
 accounted for 10 million jobs and $2.1 trillion in revenue in the United
 States in 2005. The NVCA represents the public policy interests of the
 venture capital community, strives to maintain high professional standards,
 provides reliable industry data, sponsors professional development, and
 facilitates interaction among its members. For more information about the
 NVCA, please visit http://www.nvca.org.
 
 SOURCE Thomson Financial; The National Venture Capital Association