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US Q2 venture-backed M&A activity up slightly on quarter but well down on year

Venture-backed merger and acquisition activity in the US increased marginally in the second quarter but was still well down on levels in the same period a year ago, according to new figures from VentureWire.

There were 172 deals involving at least one venture-backed firm in the second quarter, compared with 166 in the first quarter and 300 in the same quarter of 2001.

VentureWire editor Ken Andersen admitted there was nothing to celebrate in the figures but said there were faintly encouraging signs that the situation may be on the cusp of a gentle recovery.

‘Nothing as spectacular as Pfizer-Pharmacia or eBay-PayPal hit the venture scene in the second quarter. But the numbers held steady and there were signs of traditional buyers returning to the market,' he said.

Cisco Systems, for example, returned to the acquisition trail in the second quarter after a dramatic reduction in activity throughout the whole of 2001. It bought software developer Hammerhead Networks and network processor developer Navarro Networks for a combined value of $258m.

The underlying situation, however, remains difficult for venture and private equity firms looking to exit their investments.

‘Quality exits are still hard to come by for venture investors. The majority of M&A activity in the second quarter involved asset sales and defensive mergers,' Andersen said.

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