First Quarter Venture-Backed Exits at Lowest Level in Years

New York, NY — First-quarter results of venture-backed initial public offering (IPO) and mergers and acquisitions (M&A) activity indicates volume is among the lowest number in years, according to the Exit Poll report by Thomson Financial (NYSE: TOC; TSX: TOC) and the National Venture Capital Association (NVCA).

The report discloses only five venture-backed initial public offerings totaling $282.7 billion in proceeds during the first quarter of 2008, the lowest quarterly number of IPO’s since the second quarter of 2003. The M&A market value represents one of the lowest quarterly levels in the past decade with 56 deals in the fourth quarter, 20 of which had a combined disclosed value totaling $2.5 billion.

“U.S. economic uncertainty clearly impacted the venture backed IPO market in the first quarter,” said Mark Heesen, president of the NVCA. “It was not a great start to the year by any measure and we will need to see a significant increase in volume in the remaining three quarters to salvage the rest of the year. And while the acquisitions market is also showing lower volumes, the quality of the both exits – both IPO’s and acquisitions – appears to be holding up, which should translate into some much needed confidence for venture-backed companies looking to exit in 2008.”

IPO activity overview
Since 2007, a total of 37 venture-backed companies have filed for an IPO with the SEC and are currently “in registration.” This also represents a significant decrease from the previous quarter when 60 venture-backed companies were in registration.

Only one information technology IPO took place in the first quarter of 2008, brought by ArcSight, Inc., valued at $61.8 million. The Life Sciences sector led IPO's raising $221 million during the first quarter, with the largest exit at $83 million issue by the California-based IPC The Hospitalist Company, Inc. which provides, manages, and coordinates care of hospitalized patients.

Geographically, the companies who issued first quarter IPOs were located in California and Florida. There were no foreign IPOs on U.S. exchanges in the first quarter, a first since the third quarter of 2000.

As of March 28, 2008, 28% percent of the venture-backed companies that went public during the previous 12-month period were trading at or above their offering price.

M&A overview
The largest disclosed M&A deal of the quarter was Dell, Inc.'s $1.4 billion acquisition of EqualLogic, Inc, a developer of storage area network solutions, in January. A total of 56 venture-backed M&A deals were completed in Q1 of 2008 for an average deal value of $124.6 million.

IT dominated the venture-backed M&A activity, with Internet-specific companies accounting for the bulk of 41 deals and a disclosed total dollar value of approximately $2.0 billion. Non-high-tech came in next at $266.2 million; and, Life Sciences saw $229.3 million of M&A exits.

Overall, 50 percent of the deals are bringing in the top returns – those with disclosed values greater than four times the venture investment. Whereas, deals returning less than the amount invested represent 39 percent of the quarter’s total, up from 17 percent last quarter.

The complete data disclosed is available online.