Venture-backed M&As on rise in Wisconsin

In a sign that valuations may be on the rise after several years of depressed private company valuations, the number of Wisconsin companies receiving venture capital investment for mergers or acquisitions in the first quarter of 2004 is well ahead of last year’s pace.
Seven Wisconsin companies received a total of $32.8 million in venture capital investment in the quarter, well ahead of last year. In all of 2003, only nine Wisconsin companies received $44.1 million, according to new statistics provided by Thomson Venture Economics, PricewaterhouseCoopers and National Venture Capital Association Moneytree.
The number of Wisconsin companies receiving venture capital has declined steadily since 2001, when 21 companies received $99.1 million.
Two of the companies receiving venture capital in the state in the first quarter were biotechnology firms. Others included: telecommunications; IT services; business products and services; medical devices and equipment; and electronics and instrumentation.
Two of the companies were startup firms, while others were in more advanced stages of development.
Four of the companies receiving investment were based in Dane County.
Nationally, the amount generated by venture-backed mergers and acquisitions increased 75% in the first quarter of 2004 increased substantially over the previous quarter, according to the new statistical report.
During the first quarter, 77 venture-backed U.S. companies were merged or acquired for a total disclosed value of $4.03 billion, up sharply from the fourth quarter of last year, when 71 targets accounted for $2.3 billion. The figures represented the fourth straight quarter-on-quarter improvement in M&A-based liquidity after two years marked by lethargic exit markets.
The last time venture-backed M&A values surpassed $4 billion
was the first quarter of 2001, when 75 companies attracted $8.55 billion.
"Liquidity is king in venture capital. It’s been several years since venture-backed companies have had viable liquidity options," said Mark Heesen, president of the National Venture Capital Association. "The rise in valuations is a positive development towards healthy returns."
A sector breakdown shows software targets continuing to dominate with 23 deals and a total disclosed value of $1.35 billion, including two of the top 10 transactions.
Six computers and peripherals transactions accounted for $524.5 million, up
precipitously from last quarter’s $7 million in total disclosed values. Medical devices and equipment targets also witnessed an upsurge in deals and disclosed value over last quarter. Seven such companies were acquired, with six reporting a total value of $517 million and an average size of $86.2 million.
Further information about the venture capital market is available at www.ventureeconomics.com.
May 28, 2004 Small Business Times, Milwaukee, WI