Venture-backed mergers and acquisitions saw a slight increase in activity in the second quarter of 2003 compared to the previous quarter. There were 72 deals totaling $1.84 billion, with an average deal value of $68.22 million. Several sectors experienced gains, including telecommunications, biotechnology, and networking/equipment. The largest deals took place in software, biotechnology, and networking. Geographically, California saw the most deals while the Northeast region had the highest total disclosed deal value.

1. Contacts:
Jeanne Metzger, NVCA, 703-524-2549, ext 116, jmetzger@nvca.org
Joshua Radler, Thomson Venture Economics, 973-353-7139, joshua.radler@tfn.com
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. 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. 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
www.nvca.org.
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