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| News & Scoreboards |
Happy Capitalists
08/01/2004
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The value of venture capital-backed companies is on the rise after several years
in the doldrums, according to Thomson Venture Economics, a data vendor, and the
National Venture Capital Association (NVCA), a trade group. The value generated
by mergers and acquisitions involving venture-backed companies in the first
quarter increased 75 percent over the previous quarter’s total, the association
reported.
Seventy-seven venture-backed companies completed transactions
totaling $4.03 billion. In the fourth quarter of last year, 71 transactions,
totaled $2.3 billion, took place. Venture-backed M&A values have not
surpassed $4 billion since the first quarter of 2001.
The software sector
dominated the deal making, with 23 transactions and a total disclosed value of
$1.35 billion (the value of some transactions are not disclosed). Medical
devices and equipment companies also witnessed an upsurge in M&A. When
combining the figures for these medical-device businesses with biotechnology
targets, merger and acquisition activity in the life sciences sector amounted to
about 20 percent of the quarter’s activity, with $797.5 million in disclosed
value.
Oddly, despite better valuations and renewed optimism in the private
equity markets overall, fewer funds were raised in the first quarter of 2004
than in the previous quarter (see chart). Thirty-two funds closed on $2.3
billion, a drop from the previous quarter’s $5.4 billion, garnered by 50 funds,
according to the report. The first quarter’s level was akin to the third quarter
of 2003.
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