Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Tech merger&acquistion data 2008 2011

1,002 views

Published on

M&A Data for Technology Companies 2008-2009...

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

Tech merger&acquistion data 2008 2011

  1. 1. “Tech Merger&Acquisition Data: The Odds Favor Smaller Acquisitions”By Tom Tierney 20 May 2012With the Facebook IPO a couple days ago, I’m sure a lot of entrepreneurs are thinking about the pot ofgold at the end of their rainbow: will their company ultimately do an M&A exit or IPO?Spoiler Alert! The likelihood of IPO for most companies is small. The ability to fund a company to asuccessful IPO event is typically a long, difficult and expensive road. The odds favor an M&A transactionrather than IPO, as a likely successful exit.PricewaterhouseCoopers has released data over the years describing technology merger and acquisitiontransactions, I’ve included a table here of the yearly average for the past four years (the individual datafor four years (2008->2011) is at the end of this note along with pointers to the PwC reports):Tech M&A Yearly Deal Average 2008 -> 2011 (data from 1,001 M&A transactions):M&A Deal Size Deals Total $M Avg $ M % of Deals< $50M 98 $2,820 $28.50 40%$50M -> $100M 46 $3,181 $69.45 18%$100M -> $250M 48 $7,571 $158.38 18%$250M -> $500M 27 $9,200 $342.91 11%$500M -> $1B 14 $9,927 $709.78 6%>$1B 17 $53,691 $3,304.36 7%It’s interesting to note that the biggest grouping of M&A deals occurs below the $50M mark with anaverage deal size of roughly $28M for companies exiting below $50M. In some ways this is notsurprising given a lot of larger tech companies buy small R&D pre-revenue companies as almost anextension of their own R&D effort. Some large companies may even buy these small companies fortheir R&D but also “talent”: it is an easier way for them to acquire a working team in a technology spaceof interest.It’s particularly interesting to note that more than 75% of M&A deals for technology companies occurbelow the $250M deal size, the average in that range of < $160M. Although one hears of a lot of “megadeals” in tech publications, the majority of these M&A transactions are much smaller than you wouldthink.For angel investors, some of this data has been widely distributed by a Canadian angel investor namedBasil Peters (see http://www.early-exits.com/ or his book/eBook “Early Exits”). Basil has extensivelywritten about angel investors (and entrepreneurs) focusing on investments that, as a goal, target thecompany exit to these higher odds, smaller M&A deals. Note this can work out to the advantage of theangel investor and entrepreneur because little, or no, VC money may be required to get to a smallerM&A exit and both parties (investor and entrepreneur) will be much less diluted at exit. Please seeBasil’s blog and book for more information, both highly recommended.Am I saying a billion dollar exit is unattainable? No, but you need to recognize the time involved, theamount of money that is required to build a sustainable business and what all this will cost you, theentrepreneur, in dilution of your stake of the company. The odds do seem to favor smaller exits.
  2. 2. Tech M&A Deals 2011M&A Deal Size Deals Total $M Avg $ M % of Deals< $50M 107 $3,042 $28.43 35%$50M -> $100M 50 $3,548 $70.96 16%$100M -> $250M 61 $9,665 $158.44 20%$250M -> $500M 41 $13,953 $340.32 13%$500M -> $1B 24 $16,310 $679.58 8%>$1B 25 $78,594 $3,143.76 8%Tech M&A Deals 2010M&A Deal Size Deals Total $M Avg $ M % of Deals< $50M 154 $4,373 $28.40 39%$50M -> $100M 75 $5,166 $68.88 19%$100M -> $250M 83 $12,761 $153.75 21%$250M -> $500M 36 $12,707 $352.97 9%$500M -> $1B 19 $13,263 $698.05 5%>$1B 23 $58,840 $2,558.26 6%Tech M&A Deals 2009M&A Deal Size Deals Total $M Avg $ M % of Deals< $50M 48 $1,206 $25.13 44%$50M -> $100M 18 $1,234 $68.56 17%$100M -> $250M 15 $2,421 $161.40 14%$250M -> $500M 10 $3,427 $342.70 9%$500M -> $1B 6 $4,134 $689.00 6%>$1B 11 $23,912 $2,173.82 10%Tech M&A Deals 2008M&A Deal Size Deals Total $M Avg $ M % of Deals< $50M 83 $2,659 $32.04 43%$50M -> $100M 40 $2,776 $69.40 21%$100M -> $250M 34 $5,438 $159.94 17%$250M -> $500M 20 $6,713 $335.65 10%$500M -> $1B 8 $6,180 $772.50 4%>$1B 10 $53,416 $5,341.60 5%PricewaterhouseCoopers 2008/2009 [1] and 2010/2011 [2] data:[1] http://www.pwc.com/us/en/transaction-services/publications/assets/PwC-US-technology-MA-insights-2010.pdf[2] http://www.pwc.com/en_US/us/transaction-services/publications/assets/pwc-technology-mergers-acquisitions-q4-2011-outlook.pdfTom Tierney lives in Encinitas, CA and is a member of Tech Coast Angels (www.techcoastangels.com).Also see http://en.wikipedia.org/wiki/Tech_coast_angels for more background information on the TCA.

×