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By Cara Garretson
A slight uptick in the number of start-up IPOs and acquisitions done during the fourth quarter of 2009 is giving observers hope that 2010 will see more exit activity, and with it greater investor confidence in funding young companies and fueling innovation.
According to research done recently by Thomson Reuters and the National Venture Capital Association (NVCA), there were five initial public offerings from venture-backed companies during the fourth quarter, with a total value of $649 million. There were also 67 mergers and acquisitions, with a total disclosed value of $7.8 billion (not all companies that signed deals disclosed the amounts).
While the public offerings tracked during the fourth quarter showed more activity than previous quarters in 2009, that year and 2008 still represent the slowest IPO period since 1974 through 1975, said Mark Heesen, president of NVCA. On the merger and acquisition front, the last quarter of 2009 was the most active since the fourth quarter of 2007.
"Clearly, we have a long way to go towards a full recovery but we are encouraged by the increasing acquisition values and the number of companies that have filed a registration with the SEC to go public," said Heesen in a statement issued Monday. "We expect to see a gradual but marked improvement in 2010 and hope to have exponential improvements this time next year."
Currently there are 29 venture-backed companies that have filed with the SEC for initial offerings, says NVCA.
Two of the five IPOs tracked during the fourth quarter were from information technology companies. Fortinet, maker of network security products, raised $156 million in its IPO, and Echo Global Logistics, which makes logistics products for the transportation industry, raised $79.8 million. The biggest IPO of 2009 was by KAR Auction Services, an automotive services holding company, which raised $300 million.
Of the five initial offerings made during the fourth quarter, two were trading at or above their offering prices as of Dec. 30, and nine of the thirteen IPOs that went out over the year were trading at or above offering price at that same date.
Also, 48 of the 67 M&A deals signed during the quarter were with start-ups in the technology industry, according to the research. Young companies in the Internet and communications industry and media industry made up the majority of the acquisition targets. Amazon.com's acquisition of online shoe retailer Zappos.com for $930 million was the largest deal of the fourth quarter, and for the year.
For the full year, there were 13 IPOs and 262 merger and acquisition transactions, according to the study. Those figures pale in comparison to the number of deals done in previous years; 2007 saw the most M&A transactions in recent memory, coming in at 378, while 2004 held the recent record for IPOs, with 94. |
