Software & IT Services Mergers & Acquisitions Update for Q3 2010 by Generation Equity Advisors
Q3 2010 - Mergers & Acquisitions Update for the Software & IT Services sectors by Generation Equity Advisors, a technology-focused investment banking firm.
Los Angeles, CA, October 12, 2010 --(PR.com)-- Deal-Making is Back in Style
The number and value of U.S. disclosed venture capital exit deals in the third quarter of 2010 showed a mixed pattern compared to the second quarter of 2010, with more mergers and acquisitions (M&As) of VC-backed properties, but somewhat fewer initial public offerings (IPOs) of company stock.
Generation Equity Advisors, a technology focused investment banking firm, compiled the latest M&A research from sources including Thomson Reuters, National Venture Capital Association and Dow-Jones VentureSource.
The third quarter of 2010 had 104 VC-backed M&A deals compared to 97 in the second quarter, and significantly more than the 69 deals in the third quarter of 2009. The 27 M&A deals that disclosed their value totaled more than $3.8 billion in the third quarter, 31% more than the previous quarter and well more than double the $1.4 billion total value of deals a year earlier.
Most (82 of the 104) M&A deals involved information technology companies, with the other 22 split between life science (14) and non-technology (8) companies.
The number of venture-backed IPOs, however, dropped from 17 in the second quarter to 14 in the third quarter, with their total value easing from $1.27 billion in the second quarter to $1.25 billion by the end of September 2010. But the 14 IPOs in the third quarter 2010 well outpaced the 3 IPOs a year earlier — there were only 12 VC-backed IPOs in all of 2009. The $1.25 billion value of IPOs in the third quarter of 2010 also more than doubled the $572 million value of the three deals a year earlier.
More than half, 8 of the 14, IPOs involved information technology companies, with the remaining 6 divided between life science (4) and non-technology (2) companies.
"Overall, deal-making is back in style in Silicon Valley and other Technology-driven regions," according to Aaron Solganick, President/Founder of Generation Equity Advisors, a technology-focused investment banking firm. "Fueled by powerful trends in mobile devices, digital media and cloud computing, tech companies are acting on the urge to merge — a sign, let’s hope, of an improving economy."
"The exit markets have seen steady activity this year and solid gains over 2009's dismal numbers," said Jessica Canning, global research director for Dow Jones VentureSource.
The average merger and acquisition deal was worth $27 million, up 23% from the year-ago period.
Private markets deal activity is benefiting from acquisitions by traditional corporate acquirers as well as venture-backed companies such as Facebook and LinkedIn which are making strategic acquisitions.
SAP's pending $5.8 billion purchase of Sybase, IBM’s pending acquisition of Cogent and Hewlett-Packard's pending $1.2 billion takeover of Palm are some of the latest headliners.
For the shrinking venture capital industry, the surge in M&A is providing a welcome return on investments at a time when the recovery in initial public stock offerings (IPOs) remains spotty.
A mix of three factors has made M&A a more vital force in Technology-driven companies - regulatory changes, growing corporate clout and evolving technologies.
Most private companies pondering IPO’s today require more time and revenues approaching $100 million. Given such hurdles, the M&A option becomes more attractive for startup founders, executives and venture investors.
Many promising startups wind up on the shopping list of corporate giants. Cisco Systems, Oracle, HP and Google — as well as non-valley giants Microsoft, IBM and EMC — are known for their acquisition strategies. The nation's 10 largest tech companies collectively have approximately $200 billion in cash on hand.
IPO valuations are also on the rise, with IPO activity increasing five-fold from the same time last year. The actual IPO valuations have increased by about 60%, with nine IPOs raising $723 million over the whole of the quarter, compared to the IPOs of the same quarter in 2009, which raised $572 million. The largest IPO of this most recent quarter was the Monrovia, Calif.-based company Green Dot Corp, a provider of prepaid financial services, which raised $164 million.
The year seems to be doing well on the whole, though it still remains far below the stellar explosions of 2007. So far this year, venture capitalists have sold $17.74 billion worth of companies, up 75% from last year’s total at this time.
For more information and to download the full report (free):
Generation Equity Advisors, LLC
www.generationequityadvisors.com
mergers@generationequityadvisors.com
###
The number and value of U.S. disclosed venture capital exit deals in the third quarter of 2010 showed a mixed pattern compared to the second quarter of 2010, with more mergers and acquisitions (M&As) of VC-backed properties, but somewhat fewer initial public offerings (IPOs) of company stock.
Generation Equity Advisors, a technology focused investment banking firm, compiled the latest M&A research from sources including Thomson Reuters, National Venture Capital Association and Dow-Jones VentureSource.
The third quarter of 2010 had 104 VC-backed M&A deals compared to 97 in the second quarter, and significantly more than the 69 deals in the third quarter of 2009. The 27 M&A deals that disclosed their value totaled more than $3.8 billion in the third quarter, 31% more than the previous quarter and well more than double the $1.4 billion total value of deals a year earlier.
Most (82 of the 104) M&A deals involved information technology companies, with the other 22 split between life science (14) and non-technology (8) companies.
The number of venture-backed IPOs, however, dropped from 17 in the second quarter to 14 in the third quarter, with their total value easing from $1.27 billion in the second quarter to $1.25 billion by the end of September 2010. But the 14 IPOs in the third quarter 2010 well outpaced the 3 IPOs a year earlier — there were only 12 VC-backed IPOs in all of 2009. The $1.25 billion value of IPOs in the third quarter of 2010 also more than doubled the $572 million value of the three deals a year earlier.
More than half, 8 of the 14, IPOs involved information technology companies, with the remaining 6 divided between life science (4) and non-technology (2) companies.
"Overall, deal-making is back in style in Silicon Valley and other Technology-driven regions," according to Aaron Solganick, President/Founder of Generation Equity Advisors, a technology-focused investment banking firm. "Fueled by powerful trends in mobile devices, digital media and cloud computing, tech companies are acting on the urge to merge — a sign, let’s hope, of an improving economy."
"The exit markets have seen steady activity this year and solid gains over 2009's dismal numbers," said Jessica Canning, global research director for Dow Jones VentureSource.
The average merger and acquisition deal was worth $27 million, up 23% from the year-ago period.
Private markets deal activity is benefiting from acquisitions by traditional corporate acquirers as well as venture-backed companies such as Facebook and LinkedIn which are making strategic acquisitions.
SAP's pending $5.8 billion purchase of Sybase, IBM’s pending acquisition of Cogent and Hewlett-Packard's pending $1.2 billion takeover of Palm are some of the latest headliners.
For the shrinking venture capital industry, the surge in M&A is providing a welcome return on investments at a time when the recovery in initial public stock offerings (IPOs) remains spotty.
A mix of three factors has made M&A a more vital force in Technology-driven companies - regulatory changes, growing corporate clout and evolving technologies.
Most private companies pondering IPO’s today require more time and revenues approaching $100 million. Given such hurdles, the M&A option becomes more attractive for startup founders, executives and venture investors.
Many promising startups wind up on the shopping list of corporate giants. Cisco Systems, Oracle, HP and Google — as well as non-valley giants Microsoft, IBM and EMC — are known for their acquisition strategies. The nation's 10 largest tech companies collectively have approximately $200 billion in cash on hand.
IPO valuations are also on the rise, with IPO activity increasing five-fold from the same time last year. The actual IPO valuations have increased by about 60%, with nine IPOs raising $723 million over the whole of the quarter, compared to the IPOs of the same quarter in 2009, which raised $572 million. The largest IPO of this most recent quarter was the Monrovia, Calif.-based company Green Dot Corp, a provider of prepaid financial services, which raised $164 million.
The year seems to be doing well on the whole, though it still remains far below the stellar explosions of 2007. So far this year, venture capitalists have sold $17.74 billion worth of companies, up 75% from last year’s total at this time.
For more information and to download the full report (free):
Generation Equity Advisors, LLC
www.generationequityadvisors.com
mergers@generationequityadvisors.com
###
Contact
Generation Equity Advisors
Aaron Solganick
(310) 465-8940
www.generationequityadvisors.com
Aaron Solganick
(310) 465-8940
www.generationequityadvisors.com
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