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 (NASDAQ:CSCO), EMC (NYSE:EMC), Google (NASDAQ:GOOG), IBM (NYSE:IBM), Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL) and Yahoo! (NASDAQ: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