M&A And IPO Deal Flow Slows After Blistering 2014

By on April 6, 2015

stocksVenture backed IPOs and M&A exits cooled in the first quarter of 2015 after a scorching hot year of exits in 2014.

There were 86 VC-backed M&A deals in Q1 2015, with 16 of them reporting an aggregate deal value of $2.1 billion. The number of deals and dollars reported in q1 2015 dropped to the lowest level since Q1 2013, according to Thomson Reuters and the National Venture Capital Association.

The 86 M&A deals was down 21.8% from 110 deals in Q4 2014 and the $2.1 billion in deal value was down 92.6% from $27.8 billion in Q4 2014. Those comparisons however were skewed by the fourth quarter of 2014, which included the massive $19 billion Facebook acquisition of Whatsapp. On a year-over-year basis, M&A in Q1 2015 was down 25.2% from 115 deals and down 73.1% in disclosed dollars from $7.6 billion in Q1 2014.

The fourth quarter continued a slight cooling trend that started in Q4 of 2014, after what has been a very hot M&A market earlier in 2014. In the fourth quarter, the number of deals dropped 18.5%, even though overall disclosed dollars shot way up with the help of Facebook’s Whatsapp deal. Overall these fluctuations are normal over the course of several quarters. It will bear watching next quarter to see if deal flow starts to pick up again.

Not surprisingly for anyone in the technology sector, Information Technology was the hottest sector with 69 of the 86 deals and $1.1 billion in deal value. The large deal of the quarter was Under Armour’s $475 million acquisition of Myfitnesspal Inc. The second largest was Catamaran’s $260 million deal for Salveo Specialty Pharmacy.

There were 17 VC-backed IPOs, which raised $1.4 billion in Q1 2015, down 54% by deals from and down 58% by dollars from Q1 2014. The 17 IPOs was the first quarter with less than 20 VC backed IPOs since Q1 2013. The number of deals was down 54% from Q1 of 2014 and down 58% by dollars from Q1 2014. Life sciences were the big winner in Q1 2015 with 13 of 17 IPOs. Box Inc. (BOX), a cloud storage provider, was the largest IPO of Q1 2015 raising $201.2 million, while Solaredge Technologies (SEDG) was the largest non-U.S. IPO.

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