There are a few key factors for why
that is so. With overall M&A levels
declining by a significant amount from
4Q 2015 thus far, corporate buyers
are pulling back. The deals being
closed simply have to be much more
justifiable than what has been the case
previously, with strategics hunkering
down somewhat in anticipation of
growth headwinds. But in a positive
sign, the incentives to essentially
sidestep up-and-coming innovators,
add talent, grow patent portfolios
and more can be resilient, if not
so imperative as to do more than
maintain a subdued level of startup
acquisitions. Judging by the median
U.S. acquisition/buyout size of $90
million in 1Q, it’s clear corporate and
financial buyers are still able to justify
some hefty price tags. If a shakeout
in valuations produces a crop of
troubled startups, that could render
their acquisitions more attractive to
strategics, which could boost exits.
Even in an uncertain climate, corporate
buyers will pay up for key enhancing
technologies, while bargains will
always be welcome. And as for the
IPO pipeline—as mentioned in our
recent VC Liquidity Report—until the
waters calm enough to be braved by
an intrepid few, the drought should
continue.
Even corporate buyers are quite shy
U.S. venture-backed exits (#) by type
Only M&A has sustained into 2016 in terms of value
U.S. venture-backed exits ($B) by type
1,200
$100
Acquisition
IPO
Buyout
Acquisition
$90
1,000
IPO
$80
Buyout
$70
800
$60
600
$50
$40
400
$30
$20
200
$10
0
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Source: PitchBook
*As of 3/31/2016
Source: PitchBook
*As of 3/31/2016
But of the exits that occurred, many were lucrative
Median venture-backed exit size ($M) in U.S.
Unsurprisingly, software remained popular
U.S. venture-backed exits (#) by sector
$100
1,200
Commercial
Services
$90
$90
Consumer Goods
& Recreation
1,000
$80
$77
$70
$60
$71*
$51
$50
$40
Energy
800
Healthcare
Svcs/Supp./Sys.
600
IT Hardware
Media
400
$30
IPO
Pharma & Biotech
Source: PitchBook
*As of 3/31/2016. Note, due to the scarcity
of IPOs, this number is skewed considerably.
12
P I TC H B O O K 1 Q 201 6 U. S . V E N T U R E I N D U S T RY R E P O R T
2015
2014
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
2013
$0
2012
0
2016*
Acquisition/Buyout
2011
$10
Other
200
2010
$20
Software
Source: PitchBook
*As of 3/31/2016