Exit trends in 2010

January… a month for reflecting and prioritizing the new year.

I always kick off the year with a quick retrospective of M&A activity, with graphics thanks to my friends at ICON Corporate Finance, based here in sunny London.

This picture says it all:

Average exit valuations have returned to pre-recession levels, above 2x sales, and are outstripping the ratios seen in recent years. In the UK,  the highest multiple was Moneybookers, which sold at 9x sales. In the US, both Facebook and Groupon made headlines with their paper valuations at $50bn and $6bn, implying multiples of 25x and 12x, respectively. (Remember that Playfish was acquired by EA in 2009 for $300M, which was reported to be 4x revenues.)

While Facebook wasn’t an exit, and the Groupon offer was just that – an offer, 2011 looks like it’s going to be the Year Things Change. There are numerous venture-backed companies generating $100M+ in revenues that are going to IPO (some of our portfolio included). The NASDAQ was up 17% over the course of 2010, and 2011 is starting off well. My employer, Qualcomm, has already announced a $3bn acquisition of Atheros this month. Linkedin, Skype, Zipcar, etc. are all teeing up IPOs this year. I’m very bullish that 2011 is going to be the year we’ve all been waiting for. VCs and Entrepreneurs alike.

Hold on to your hats.


  1. Jason what do you think about it potentially being a bubble with Facebook and the like getting valuations like they are?

  2. Kyle,

    Things look pretty rich valuation wise these days- from the angel market all the way up… it certainly feels very bubble-like… Netflix and Salesforce are two public companies that tend to defy logic – Netflix is valued at roughly 5x sales, Salesforce at 16x.

    Is 25x out of line? FB has barely turned on their money making options, so probably not…

    12x for Groupon is another story though. But, I’ll save my thoughts on Groupon for another day.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s