Study: VC-backed mergers, IPOs slowing

In the first quarter of 2008, a study says there were 56 venture-backed deals, 41 deals of which were related to information technology.

The number of venture-backed mergers and acquisitions in the first three months of 2008 hit an all-time quarterly low for the decade, according to a new report from Thomson Financial and the National Venture Capital Association. Internet-related deals dominated the pack.

In the first quarter of 2008, the association reported that there were 56 venture-backed deals, 41 deals of which were related to information technology. (The biggest deal was Dell's $1.4 billion buyout of EqualLogic, a provider of storage area network solutions.) Those 41 mergers or acquisitions had a disclosed dollar value of about $2 billion total, according to the study; and Internet-related deals accounted for about $1.7 billion of that.

The average disclosed deal value for the quarter was $124.6 million, the study said.

The NVCA also reported that VC-backed IPOs in the first quarter of 2008 dropped to lows from 2003. It estimated that there were only five VC-backed public offerings for a total of $282.7 million in the first quarter, compared with two IPOs reported in the second quarter of 2003.

"U.S. economic uncertainty clearly impacted the venture-backed IPO market in the first quarter," NVCA President Mark Heesen said in a statement.

He added: "While the acquisitions market is also showing lower volumes, the quality of exits--both IPO's and acquisitions--appears to be holding up, which should translate into some much needed confidence for venture backed companies looking to exit in 2008."

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