SemEquip Backers May Wait a While for Pay Back from Ceradyne

Ceradyne Inc. (CRDN) appears to have gotten its latest purchase on the cheap. The industrial parts manufacturer is buying venture-backed SemEquip Inc. for $25 million in cash, plus potential future payments of up to $100 million over the next 15 years, based on the company's performance.

That upfront consideration is a lot less than SemEquip's valuation three years ago, when it closed its second funding round for $26 million and was said to be valued at $76 million. In 2005, after raising some $14 million in five prior rounds from mostly private investors, SemEquip closed a $26 million funding round led by LightSpeed Venture Partners.

Eight-year-old SemEquip is a patent-rich company promoting a new paradigm of chip manufacturing in which it sells directly to chip makers rather than to the companies like Applied Materials Inc. (AMAT) that make the chip production equipment. Although the company attracted a lot of interest, judging by its sale price it is still working to make good on its promise.