Contacts:
Emily Mendell, The Weiser Group for NVCA, 610-359-9609, emendell@weisergroup.com
Josh Radler, Thomson Venture Ec...
deals completed in a single quarter since the fourth quarter of 2001, when 85 deals were
valued at $1.9 billion.

quot;Hav...
stimulate the flow of equity capital to emerging growth companies by representing the
public policy interests of the ventu...
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Venture-Backed Merger and Acquisition Activity Remained Steady Amidst Lower Valuations in 2002

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Venture-Backed Merger and Acquisition Activity Remained Steady Amidst Lower Valuations in 2002

  1. 1. Contacts: Emily Mendell, The Weiser Group for NVCA, 610-359-9609, emendell@weisergroup.com Josh Radler, Thomson Venture Economics, 973-353-7139, Joshua.radler@tfn.com Venture-Backed Merger and Acquisition Activity Remained Steady Amidst Lower Valuations in 2002 February 18, 2003 Newark, New Jersey -- The average value of venture-backed mergers and acquisitions completed in 2002 fell dramatically from the previous year, according to Thomson Venture Economics and the National Venture Capital Association. For the year, 300 transactions closed with a value of $7.2 billion compared with 2001 when the sale of 336 companies returned $17.1 billion. This significant drop in average deal size reflects a large number of low valuation sales, which brought down the more successful value realizations from portfolio companies during the year. Amid this backdrop of general decline, the year was marked by a strong degree of stability; with no large swings in activity or value from quarter to quarter as was seen in both of the two previous years. Venture-Backed M&A Activity by Venture-Backed M&A Activity Region, 2002 By Quarter, 2000-2002 Regions Deals Value ($M) Quarter DealsValue($M) California 117 1,834.80 2000-1 93 23,809.36 New England 38 1,202.51 2000-2 91 26,380.42 Southeast 30 993.43 2000-3 70 7,894.79 Greater New York 24 957.42 2000-4 54 9,871.65 Mid-Atlantic 19 610.84 2000 Total 308 67,956.21 Southwest 14 505.18 2001-1 70 8,046.00 Northwest 6 368.21 2001-2 93 3,382.49 Ohio Valley 14 258.29 2001-3 88 3,721.32 Rocky Mountains 14 165.05 2001-4 85 1,938.34 Mid-West 8 145.18 2001 Total 336 17,088.15 South 8 80.10 2002-1 67 1,629.20 Great Plains 8 43.17 2002-2 78 1,958.53 Thomson Venture Economics/ 2002-3 73 1,970.39 National Venture Capital Association 2002-4 82 1,606.06 2002 Total 300 7,164.18 Thomson Venture Economics/ National Venture Capital Association In the fourth quarter of 2002, acquirers paid $1.6 billion for 82 venture-backed companies. While the total transaction value declined by more than $300 million from the third quarter, the number of deals rose slightly from 73. This was the highest number of
  2. 2. deals completed in a single quarter since the fourth quarter of 2001, when 85 deals were valued at $1.9 billion. quot;Having a strong exit market is essential to a healthy venture capital investment flow and we were challenged in 2002,quot; said John S. Taylor, Vice President of Research at the NVCA. quot;Looking ahead, it’s likely that completing an IPO will continue to be difficult in this environment. Therefore, venture capitalists are looking at M&A as a key part of their exit strategies. quot; Continuing as the leading sector, Software dominated the venture-backed M&A landscape in terms of both number of deals and total value. This sector accounted for 43% of the deals and 40% of the value for the quarter, with 36 transactions valued at $655.5 million. Four of the top ten deals for the quarter were software related including the sale of PentaSafe to NetIQ for $250 million in December and the eRoom Technology acquisition by Documentum for $167.7 million. One of the more interesting developments was the surge in activity among healthcare- related companies in the Medical Devices/Equipment and Healthcare Services sectors. Not traditionally a major factor in the venture-backed M&A realm, these two sectors combined to account for more than 25% of the value for the quarter. Three healthcare services companies were sold for $105 million, and three Medical Devices/Equipment deals garnered $315.2 million. The Medical Devices sector had the largest deal of the quarter. Medtronics purchased Spinal Dynamics, a developer of spinal replacement discs, in October for $269.5 million. Additionally, American Medical Systems acquired cryosurgical technology developer CryoGen for $40 million. Another sector, Telecommunications, made a relatively strong showing with 7 deals valued at $172.9 million. On the contrary, IT Services had its slowest quarter of the year with six companies accounting for $6.2 million in transaction value. However, over the course of the year this sector was one of the strongest with 31 deals worth $541.9 million. The year also saw two significant changes in the distribution of deals geographically. California retained its pre-eminence among the regions in the total number of deals closed with 117. However, its share of the total value dropped significantly from $8.6 billion in 2001 to $1.8 billion in 2002. This drop made the re-emergence of the Southeastern and Middle-Atlantic regions more dramatic after a weaker showing 2001. The middle-states of Delaware, Virginia, Maryland, and the District of Columbia rebounded from $133 million in 2001 to $610 million in 2002; Florida, Georgia, South Carolina, and North Carolina witnessed an equally impressive burst of activity with 30 deals valued at $993 million, up from $389 million the previous year. The New England region maintained its second ranking behind California with $1.2 billion spread over 38 transactions for the year. 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
  3. 3. 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. 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 35 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 a long-standing relationship 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 www.ventureeconomics.com. Thomson Financial Thomson Financial (www.thomsonfinancial.com), is a US$1.6 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 (www.thomson.com), 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). ###

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