U.S. Venture-Backed Company IPOs Spike, M&As Slip

NEW YORK, July 1 /PRNewswire/ -- During the second quarter of 2010, 15 IPOs by venture-backed companies raised $899 million, up from three offerings which raised $232 million in the same period last year, according to Dow Jones VentureSource. Seventy-nine M&As raised $4.3 billion in the most recent quarter, a decrease in deal activity from the 82 M&As that netted $2.9 billion in the second quarter of 2009.

"Venture-backed IPOs hitting double-digits for the first time since 2007 is promising, but a spate of recent withdrawals by IPO candidates signals some instability in the market," said Jessica Canning, global research director for Dow Jones VentureSource. "Three companies withdrew their IPO registration in the second quarter, most citing unfavorable market conditions, leaving 41 companies in the pipeline."

The largest IPO of the second quarter and the year belongs to Palo Alto, Calif.-based Tesla Motors, a provider of electric vehicles, which raised $202 million.

M&As Down in Q2, But Up in First Half Overall

Despite a 4% year-over-year decrease in deal activity during the most recent quarter, M&A activity was up in the first half of the year. During the first six months of 2010, 182 deals closed, a 12% increase from the 162 deals closed during the same period last year.

Scott Austin, editor of Dow Jones VentureWire said: "The momentum the M&A market gained over the last year has stalled, supporting investors' sense that the venture recovery is vulnerable to setbacks. The European debt crisis is a likely catalyst for many of the IPO withdrawals and underwhelming public-market debuts posted this quarter as well as the drop in M&A activity as corporations hesitate to close new deals."

The median amount paid for a venture-backed company in the most recent quarter is $70 million, almost five times more than the $14.5 million median paid during the second quarter of 2009.

The largest M&A deal of the quarter belonged to San Mateo, Calif.-based AdMob, a developer of an online mobile advertising marketplace, which was acquired by Google for $750 million.

Record Time to Liquidity for Exits Via Public Markets

Venture-backed companies that went public during the most recent quarter took a median of 9.4 years to achieve liquidity, the longest recorded median since VentureSource began reporting on the industry in 1992. Prior to 2010, the longest median time to liquidity for companies exiting on the public markets was 8.7 years in 2008. The $70 million median amount of venture capital raised prior to liquidity during the most recent quarter is 65% higher than the 2009 median.

It took a median of 5.1 years and a median of $18 million for a venture-backed company to reach liquidity via a merger or acquisition in the second quarter of 2010. This is 16% more time and 2% more capital than the same period last year.

To download additional data, visit http://bit.ly/VSQ210. For information on Dow Jones VentureSource's research methodology, visit http://bit.ly/VSFAQs.

For more information, journalists can contact Kim Gagliardi at +1 603-864-8873 or [email protected]. For general information about Dow Jones Private Markets, visit http://www.dowjones.com/privatemarkets.

About Dow Jones

Dow Jones & Company (www.dowjones.com) is a News Corporation company (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV; www.newscorp.com) and a leading provider of global news and business information. Its principal products include The Wall Street Journal, Dow Jones Newswires, Dow Jones Factiva, Barron's and MarketWatch. Through its Local Media Group, Dow Jones operates community-based newspapers and Web sites. Dow Jones also provides news content to television and radio stations.

SOURCE Dow Jones

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