The value of venture-backed exits (which is almost entirely M&A these days) might be down about 50 percent in the third quarter, but total M&A activity (including public companies) is seeing a noticeable uptick.
We ran some numbers on Crunchbase, which keeps track of all announced acquisitions, and in the third quarter $31.8 billion worth of acquisitions were announced, double the amount from the second quarter and up fourfold from the $7.6 billion low in the fourth quarter. That number was even up 23 percent from the year before. Update: Those original numbers were based on a preliminary run. We’ve since done a final run, and the the value of deals in the quarter were even higher: $45.1 billion (versus $15.4 billion in the second quarter).
Many of the bigger deals involved publicly traded companies, such as Xerox buying Affiliated Computer services for $5.75 billion, Dell purchasing Perot Systems for $3.9 billion, and Adobe picking up Omniture for $1.8 billion. There were also a lot of biotech and pharmaceuticals deals such as Abbott Labs swallowing Solvay Pharmaceuticals ($6.6 billion) and Dainippon Sumitomo eating Sepracor ($2.6 billion).
The actual number of M&A deals is pretty flat at 213 231, which is about where it’s been for the past four quarters. But the average value of each deal in the quarter was $349 million, up 85 percent from last year. So buyers might be more picky, but when they do pull the trigger they are willing to spend more money. And they are more willing to spend money for companies with established businesses, which often means they are publicly traded or have been around a while.
RT @BorowitzReport Twitter valued at $1,000.000.000.00 would be more, but analysts ran out of characters.
A lot of the companies that had dreams/plans to go public just can’t wait around for the IPO market to pick up. it’s pretty simple: M&A is the best option for companies (and investors) looking for those exits
Hope this is a sign for good things to come
I don’t necessarily think increased M&A activity is a sign of a strong(er) economy. Often it’s that the only avenue for growth is acquisitions, since organic growth is suffering as consumer / business demand remains weak.
I am a statistic freak. Ty for the graphs. It would have been nice to see how of M&A were public companies and how many were private.
Large organizations have to acquire innovation because they’re too big to get anything done.
Elephants can dance, but it’s more like a lumbering shuffle…
Increase in venture exits = higher valuations because oppt’y costs of being acquired are higher.
Right now, nobody is worrying about venture exits.
Of course M&A is up: Buyer’s Market.
You wanna know why venture-backed exits are down? Because the market is becoming more and more fragmented with small teams building small but profitable apps on iphone and the social networks. No one’s going to acquire a team of 2 people making $1M / year, VCs don’t want to give their money to something that doesn’t have the potential to become the next billion dollar business, and the founders are happy with their current jobs and for the most part aren’t looking for an exit.
You cannot make a great living writing apps for iphone, unless u r in the top 10 , which only 10 people are, and not all startups are app developers.