IPOs are on the way up, but M&A deals are coming down. That’ the portrait in a new report released today from DowJones VentureSource. During the first quarter, DowJones tracked 91 companies that were sold for $8.9 billion, a 22 percent drop compared to the same period last year. The IPO total remained relatively tiny, but it is showing a positive trend with 11 venture-backed companies debuting on public stock exchanges. That was up from eight IPOs during the first quarter of last year.
The downturn in M&A activity is being driven by rising valuations of companies, said Jessica Canning, director of global research for Dow Jones VentureSource.
“Corporations have cash on hand and are willing to invest, but the deals aren’t happening,” she said. “Acquirers may feel that rising valuations have companies on the wrong side of the fine line between good deal and risky investment.”
It’s certainly been a dry spell in the Seattle area for IPOs. The last technology company to issue shares on Nasdaq was Motricity, the Bellevue mobile software company which went public last Spring. The pipeline of news deals also is pretty thin, with no serious contenders in registration.
Nonetheless, there have been some notable buyouts of Seattle companies in recent months. (AT&T agreeing to buy T-Mobile USA, EMC buying Isilon Systems; and Walgreens taking out drugstore.com).
Those deals alone have added fuel to the M&A market in the Seattle area. Who is next?
Here’s a look at some of the charts from the DowJones report: