The red-hot market for initial public offerings and mergers and acquisitions slowed during the third quarter, perhaps damaged by Facebook’s debut in the public markets in May. According to a report from Dow Jones VentureSource, just 10 venture-backed companies raised $807 million via IPOs in the third quarter. That was the fewest number since the fourth quarter of 2011, though the amount of money raised was up from the same period last year and The Wall Street Journal notes that it is still the best year for IPOs since 2007.
But the big slowdown occurred on the M&A front as the number of deals dropped 32 percent from the same period a year ago, falling to 99 deals.
“While there have been some high-profile IPO disappointments among consumer-focused companies, enterprise-related offerings found success in recent months,” said Zoran Basich, editor of Dow Jones VentureWire. “Meanwhile, the slip in M&A activity shows that corporate acquirers are still proceeding cautiously amid a slow economic recovery.”
In Washington state, the slow down has been acute, with the last venture-backed IPO occurring in July 2011 (Zillow). Few deals of the size of PopCap’s sale to EA or DoubleDown Interactive’s sale to IGT have occurred in recent months. Microsoft, however, was active on the acquisition front during the quarter, gobbling up Yammer for $1.2 billion in July.
California also remains the hub of activity. California companies accounted for nearly half of venture-backed M&A deals (47) and 60 percent of IPOs.
The report also found that it took companies a median of $16 million in venture financing to reach an M&A event. That was six percent less than in the third quarter of 2011. It also took companies a median of 5.3 years to reach an exit, less time than the 5.72 median a year earlier.
[IPO image via BigStock]