According to VentureSource, The $27 million median amount paid for a venture-backed company in the most recent quarter is a 17% increase from the $23 million median paid during the same period in 2009. Companies that exited during the first quarter raised a median of $19 million in venture capital before exiting through a merger or acquisition, a 19% increase from the $16 million median raised during the same period last year. According to Cambridge Associates, the total value paid to $1.00 VC capital was $0.90 in 2008, $0.88 2007, $0.93 2006, $0.94 2005 and $1.02 in 2004.
Most VCs and entrepreneurs are earning near zero contributing to the formation of an unprecedented technology M&A wave. End of life VC funds and sellers stranded for years are desperate as the VentureSource numbers indicate. The most acquisitive buyers including Cisco (CSCO), EMC (EMC), Google (GOOG), IBM (IBM), Intel (INTC), Microsoft (MSFT), Oracle (ORCL) and Yahoo! (YHOO), that have purchased more than 500 companies from 2001-2009, are sitting on piles of cash.
But the earthquake that could form an M&A Tsunami is President Obama seeing his campaign promise to set zero capital gains for small business sales to fruition. Capital gains policy response will serve as regulatory rocket fuel for M&A not unlike the Taxpayer Relief Act of 1997 (exempting most home sales from capital-gains taxes) fueled the housing bubble.
Disclosure: No positions