The venture-backed initial public offering market saw solid gains in 2006, as the value of such offerings neared $4 billion. And despite a slowdown in the number of VC-backed M&A deals, their total value remained on par with last year, thanks in large part to Google Inc.’s acquisition of YouTube Inc.
There were 56 completed IPOs of VC-backed companies in 2006, which raised a total of $3.7 billion, according to data released by VentureOne, a research unit of Dow Jones & Co., the publisher of this newsletter. That far outstrips 2005’s total of 42 IPOs and $2.3 billion raised, though it falls short of 2004’s 67 IPOs and $5 billion raised.
There were 18 completed IPOs of venture-backed companies during the fourth quarter of 2006, a healthy jump from the 12 IPOs during the year-earlier period and the highest total since the fourth quarter of 2004, according to VentureOne. The fourth quarter of 2006 saw $1.2 billion raised from the IPOs of VC-backed companies, compared to $697 million in the fourth quarter of 2005.
While IPO activity was respectable in 2006, venture-backed M&A deal activity lagged. That, however, was offset by a surging individual M&A deal size - notably the $1.65 billion acquisition of YouTube by Google Inc. in October - keeping dollar volume relatively even.
The past year as a whole saw 404 venture-backed M&A deals, versus 407 in 2005, the lowest yearly total since 2003. The fourth quarter of 2006 saw the sharpest decline, with 75 M&A deals - the fewest in any quarter since the first quarter of 1999, when there were 53, according to VentureOne. But those 75 M&A deals in the fourth quarter were worth some $7.3 billion, outpacing the $5.5 billion value of the 102 deals done in 2005’s fourth quarter. A large portion of the fourth quarter 2006 total, of course, was thanks solely to YouTube.