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US venture-backed exits on the rise

1 Oct 2010

The exit market for US venture capital-backed companies may be starting to thaw, with over 100 companies exiting via merger, acquisition or buy-out during the third quarter 2010.

According to new data from Dow Jones VentureSource, 102 venture-backed company exits were achieved over the quarter, netting $5.7bn, an increase of over $2bn on the 93 exits over the same quarter 2009, which brought in $3.3bn.

The number of IPOs exits over the quarter jumped to nine, compared to two over the third quarter of 2009, but the lion’s share of deal flow was achieved by mergers and acquisitions, which accounted for 96 of the exits and $5.1bn of the capital raised.

The median amount paid for a venture-backed company in the quarter was $27m,
23 per cent more than in the third quarter 2009, with the biggest deal of the period bein the acquisition of social networking games developer Playdom by Walt Disney for $563m.

Dow Jones VentureSource global research director Jessica Canning said, “The exit markets have seen steady activity this year and solid gains over 2009′s dismal numbers. Private markets deal activity is benefiting from acquisitions by traditional corporate acquirers as well as venture-backed companies such as Facebook and LinkedIn which are making strategic acquisitions.”

The trend also revealed a trend for shortening investment lifespans but increasing capital requirements, with the median time to exit dropping 20 per cent to 4.8 years, but a 30 per cent increase in capital spent to $23m.

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