IPOs Continue to Barely Exist

By October 01, 2009

Venture-backed IPOs continue to be almost nonexistent for the second straight year, as the number of exits in Q3 2009 was only three, according to new data from Reuters and the National Venture Capital Association (NVCA). Overall, IPOs are up over 2008, but don’t start celebrating yet, the NVCA cautions. "The fact that the many in the media are classifying three IPO's as resurgence is evidence of how low our expectations have become,” said Mark Heesen, president of the NVCA. The three exits, worth a total of $572.1 million, fell short of Q2’s five exits worth $720.7 million.

Still, despite the struggles, the market is showing signs of recovering, as this year’s figures through three quarters already exceed all of 2008’s, when only six exits totaling $470.2 million occurred. Thus far this year there have been eight IPOs for a total of $1292.8 million.

This is a far cry from two years ago, when there were 86 IPOs for the year, more than 14 times the 2008 amount and 10 times this year’s amount through three quarters.

Another positive sign is that this month saw the largest venture-backed IPO since March 2007, as A123 Systems raised $380.4 million.

While IPOs are outperforming 2008’s numbers, the same cannot be said for mergers and acquisitions. There were 62 M&A deals in Q3 2009, with 21 disclosed deals worth $1208.4. In Q3 2008, there were 88 M&A deals, with 32 disclosed deals worth $3080.2 million.

“On the acquisitions side, both volume and average disclosed value declined in the third quarter which is not the direction we hoped to see,” Heesen said.

“While the psychology of the market is trending positive, our original forecast of a true recovery not beginning until 2010 still unfortunately holds true," Heesen said.

Legal mentions © L’Atelier BNP Paribas