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VC Mergers/Acquisitions Rebound, IPOs Drop in Q3 2010

$100 bills in a circle (Photos8.com)

(Photos8.com)

The number and value of U.S. disclosed venture capital (VC) 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. Exit deals — either M&As or IPOs — represent the transactions that generate returns for VC investors.

Thomson Reuters and National Venture Capital Association compile and report these data collected by 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 percent 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.

Related: Science Sectors Help Power 2Q Jump in Venture Financing

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