"Big Exits" Up for Venture Capital-backed Healthcare Companies
Silicon Valley Bank Study of Healthcare M&A Predicts Continued Momentum and Solid Returns
SANTA CLARA, Calif. – August 14, 2013– Silicon Valley Bank, financial partner to technology and life science companies and their investors worldwide, released a study today that examines the merger and acquisition behavior of private, venture capital-backed biotech and medical device companies.
Based on an analysis of private merger or acquisition transactions of US-based, venture capital-backed companies between 2005 and 2012, Silicon Valley Bank found continued growth in the number of "Big Exits" among biotech, healthcare services and medical device companies. Big Exits were defined as acquisitions where the upfront payment totaled in excess of $50 million for device and service companies and $75 million for biotech companies.
- 38 Big Exits in 2012 -- 8 year high
- Estimated $16 billion in payouts to investors in private Big Exit M&A in last three years
- 44% of achievable milestones hit in structured biotech and device deals
"For the second year in a row, we saw the most VC-backed Big Exits in healthcare, generating significant liquidity," said Jonathan Norris, Managing Director with SVB Capital and author of the report. "We think strong M&A numbers will continue in 2013. Coupled with an impending decrease in venture capital investment in the healthcare sector and a strong biotech IPO market, we expect positive future returns for firms that have capital to deploy."
The study reveals that despite the strong environment for big exits, healthcare Series A investment is on the decline. Investment is substantially down in medical device Series A year over year; however, biotech stays steady during that time, in large part due to the significant investing activity of corporate venture capital in 2012. Corporate Venture was part of the investor syndicate in 30% of all biotech Series A equity financings last year, twice that of previous two years signaling corporate interest in this sector.
Silicon Valley Bank works with 50 percent of healthcare-focused venture capital firms and venture-backed companies nationwide, specializing in biotech, medical device and healthcare services.
About Silicon Valley Bank
Silicon Valley Bank is the premier bank for technology, life science, venture capital, private equity and premium wine businesses. SVB provides industry knowledge and connections, financing, treasury management, corporate investment and international banking services to its clients worldwide through 28 U.S. offices and six international operations. (Nasdaq: SIVB) www.svb.com.
Silicon Valley Bank is the California bank subsidiary and the commercial banking operation of SVB Financial Group. Banking services are provided by Silicon Valley Bank, a member of the FDIC and the Federal Reserve System. SVB Financial Group is also a member of the Federal Reserve System.
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