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VC M&A Hits New Low

May 14

The dollar volume of acquisitions for ventured-backed companies has hit its lowest level since 1996.

According to Thomson Venture Economics and the National Venture Capital Association, venture capitalists sold or merged 65 portfolio companies for $1.34 billion in Q1 2003. That compares to 83 deals for $1.6 billion in Q4 2002, and 68 deals for $1.6 billion in Q1 2002.

"The lower average valuations are the result of a changing mix of successful growth-oriented acquisitions and the exits of challenged companies," said the NVCA’s John Taylor. Translation: VC’s had fewer attractive properties to sell, and more unattractive ones. Thus, the lower number of deals and the lower average value per deal.

Software company M&A accounted for about 40% of the last quarter’s VC deal dollar value, the largest single sector.


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