Jeanne Metzger, NVCA, 703-524-2549, ext 116,
Joshua Radler, Thomson Venture Economics, 973-353...
Although the Software sector still dominated the quarter with regard to deal volume with 25 transactions,
the total disclo...
The National Venture Capital Association (NVCA) represents over 450 venture capital and private
equity organizations. NVCA...
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Venture-Backed M&A Activity Witnesses Slight Uptick in Q2


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Venture-Backed M&A Activity Witnesses Slight Uptick in Q2

  1. 1. Contacts: Jeanne Metzger, NVCA, 703-524-2549, ext 116, Joshua Radler, Thomson Venture Economics, 973-353-7139, Venture-Backed M&A Activity Witnesses Slight Uptick in Q2 71 Companies Acquired for $1.84 Billion August 11, 2003 – Newark, NJ - According to Thomson Venture Economics and the National Venture Capital Association (NVCA), in the second quarter of 2003 72 venture-backed companies were acquired for a total value of $1.84 billion, spread among the 27 targets that disclosed a deal value. These figures represent an average deal value of $68.22 million per disclosed deal. The modest increase in activity in the second quarter followed two straight quarters of decline. This directional change was the product of a resurgence in activity in the Telecommunications sector, and healthy increases in the Biotechnology and Networking/Equipment sectors. The quarter also witnessed rather large increases of activity in both California and the Northeast. Venture-Backed M&A Activity by Quarter, 2000-2003 Avg Size of Total Deals with Deals with Total Disclosed Disclosed Disclosed Quarter Deals Value($M) Values Values($M) 2000-1 93 23,809.36 64 372.02 2000-2 91 26,380.42 59 447.13 2000-3 72 7,982.59 45 177.39 2000-4 58 10,181.65 34 299.46 Total 2000 314 68,354.01 202 338.39 2001-1 73 8,109.20 37 219.17 2001-2 96 3,426.79 44 77.88 2001-3 89 3,733.32 46 81.16 2001-4 90 1,946.15 37 52.60 Total 2001 348 17,215.47 164 104.97 2002-1 69 1,629.20 34 47.92 2002-2 81 1,965.37 40 49.13 2002-3 76 2,616.79 39 67.10 2002-4 84 1,619.50 37 43.77 Total 2002 310 7,830.86 150 52.20 2003-1 68 1,453.29 21 69.20 2003-2 72 1,841.93 27 68.22 First Half 2003 140 3,295.22 48 68.65 Thomson Venture Economics/ National Venture Capital Association “Unlike other venture industry metrics, which show an 80% or greater decline from peak 2000 levels, the number of M&A exits have remained fairly robust. What we need to see going forward is an increase in average valuations of venture-backed acquisitions, commented Mark G. Heesen, NVCA President.
  2. 2. Although the Software sector still dominated the quarter with regard to deal volume with 25 transactions, the total disclosed value of the eight deals reporting was $509.42 million. The largest software deal of the quarter was Microsoft’s acquisition of Java-based applications designer PlaceWare for $200 million. This was the second largest deal of the quarter across all sectors. The Networking and Equipment and Biotechnology sectors both registered gains over the quarter. Four Networking companies garnered $314 million, an increase from the first quarter of when 2 companies reported $176 million in deal value. The largest deal in this sector was the $178 million acquisition of optical networking equipment developer WaveSmith Networks by Ciena Corporation in June. Three Biotechnology companies were acquired for $293.98 million, with a fourth not reporting a deal price. Last quarter, six companies attracted $199.2 million. The substantial increase this quarter is attributable to the acquisition of Idenix Pharmaceuticals for $255 million by Novartis Pharma AG, which was the largest deal of the quarter. Venture-Backed M&A Activity in Top Five Industries, Q2 2003 Avg Size of Deals with Total Deals with Disclosed Disclosed Purchase Industry Deals Values Price ($M) Value($M) Software 25 8 509.42 63.67 IT Services 9 5 281.03 56.21 Telecommunications 6 1 180.00 180.00 Biotechnology 4 3 293.98 97.99 Networking and Equipment 4 4 314.00 78.50 Thomson Venture Economics/National Venture Capital Association Other deals of note include the $180 million acquisition of wireless infrastructure designer Winphoria Networks by Motorola in the Telecommunications sector. In the Medical Devices sector, Abbott Labs’ acquisition of Spinal Concepts, the fifth largest deal of the quarter, accounted for $170 million. Analyzed geographically, there were two promising developments during the second quarter. California, the epicenter of venture capital activity, retained its supremacy over other regions in terms of number of deals with 33, an increase of ten deals from last quarter’s 23. New England, another major center of venture capital activity, came in with the largest reported value at $785.7 million. Venture-Backed M&A Activity by Region, Q1 2003 vs. Q2 2003 Value Value Q12003 Deals Q22003 Deals ($M) ($M) California 23 387.99 California 33 666.23 New York Metro 5 276.00 Northeast 13 785.70 Southeast 3 223.60 Southeast 6 36.00 Mid-Atlantic 4 188.10 Ohio Valley 4 131.00 Great Plains 5 160.00 Southwest 2 170.00 Thomson Venture Economics/National Venture Capital Association
  3. 3. The National Venture Capital Association (NVCA) represents over 450 venture capital and private equity organizations. NVCA's mission is to foster the understanding of the importance of venture capital to the vitality of the U.S. and global economies, to stimulate the flow of equity capital to emerging growth companies by representing the public policy interests of the venture capital and private equity communities at all levels of government, to maintain high professional standards, facilitate networking opportunities and to provide research data and professional development for its members. For more information visit Thomson Venture Economics, a Thomson Financial company, is the foremost information provider for equity professionals worldwide. Venture Economics offers an unparalleled range of products from directories to conferences, journals, newsletters, research reports, and the Venture Expert™ database. For over 40 years, Venture Economics has been tracking the venture capital and buyouts industry. Since 1961, it has been a recognized source for comprehensive analysis of investment activity and performance of the private equity industry. Venture Economics maintains long-standing relationships within the private equity investment community, in-depth industry knowledge, and proprietary research techniques. Private equity managers and institutional investors alike consider Venture Economics information to be the industry standard. For more information about Venture Economics, please visit Thomson Financial Thomson Financial (, is a US$1.5 billion 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 (, a leading provider of value-added information, software applications and tools to more than 20 million users in the fields of law, tax, accounting, financial services, higher education, reference information, corporate training and assessment, scientific research and healthcare. The Corporation reported 2001 revenues of US$7.2 billion and its common shares are listed on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).