The IPO is Back (v2)

Posted on April 4, 2011 by Jeff Richards

The engine continues to hum.  I wrote back in early January that the “IPO is Back, So Is M&A.” New Q1 2011 data from NVCA reinforces this point, as covered by GigaOM this morning.  14 venture-backed companies completed IPOs in Q1, with 11 trading up from their offering price. Another 49 venture-backed companies are on file.

IPOs are happening because, for the most part, the companies offering their shares in 2010 have beat or hit their forecasted numbers.  As a result, share prices have tended to increase or at least hold their gains.  This makes the investors who buy new offerings happy (they get paid to make money for their investors).  The average tech IPO traded up 42% from its offer in 2010. For those who want more detail on the performance of 2010 IPOs, Pacific Crest Securities has a nice recap available via this link.

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The IPO is Back. So is M&A.

Posted on January 3, 2011 by Jeff Richards

The NVCA has new data out about Q4 and full year 2010 IPO and M&A data for venture backed companies.  Good news for entrepreneurs and VC’s – the IPO is back (which, in turn, helps create a healthy M&A market).  A few highlights:

- Q4 IPO volume – driven largely by Chinese IPO’s – was at its highest level since 2000 (32 total, 17 from China backed by US firms)

- Full year venture-backed IPO volume was at its highest level since 2004, with 72 total

- There were more than 400 venture-backed M&A exits – the highest level since 1985

A positive M&A market for entrepreneurs and VC’s is directly related to a positive IPO market.  When great companies can stick to their plan and raise public capital, it forces large buyers to move a bit more aggressively to acquire their preferred acquisition targets (buy now at $100M vs. wait a few years and pay several times more).  It also can help drive up prices for the best companies, providing more highly valued comps and giving entrepreneurs/CEO’s/investors the confidence to say no at lower prices.

My next post will be on what we learned about the “new model” for IPOs, both from the market at large as well as our experience helping 6 of our portfolio companies go public in 2010.

Filed under: Entrepreneurs, News, Uncategorized, Venture Capital | Tagged: , , | 1 Comment »

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