Only 1% of technology exits were unicorns in 2013

2013 was a very busy year for business transfer agents, as some 1,825 private technology companies exited. We certainly played a role in this impressive figure, aiding the exits of businesses such as Intelligent Retail, a multi-channel retail solution; Capital Capture, a recognised Business Process Outsourcing (BPO) specialist; and KnowledgeCenter, which provides tailored business solutions to the insurance industry. Yet of the total number of exits made in 2013, only 1% reached the much sought-after tag of “unicorn”, an acquisition worth $1.0 billion or more.

According to a report by CB Insights titled the “2013 Global Tech Exits Report”, some 1,761 private tech firms were acquired across the globe, and another 64 tech companies went public. The peak in 2013 was Q4 when some 534 M&A deals went through and 23 IPOs, a trend that forecast a positive 2014. The second half of 2013 was more active, with almost 50% more M&A deals and almost 65% more IPOs.

However, despite what is considered a fairly successful year for tech exits, only 1% of all deals reached the $1 billion and above total. This ratio is certainly a realistic reflection of how few businesses are able to pull in massive deals, with just over 70% of exits valued at under $200 million. Around 45% of all deals were for less than $50 million. Only 19 private tech firms went for above $1 billion. It is thus unsurprising that Facebook’s acquisition of WhatsApp made such major headlines this year, considering that the $19 billion acquisition represented almost 80% of the entire value of 2013 exits. 2014 is therefore likely to be a record breaking year for total acquisition values.

Interestingly, around two-thirds of tech exits in 2013 had previously not raised any institutional capital. At the other end of the scale, 29 companies raised around $100 million before making their exit.

The five most active countries in tech exits were the US, Canada, China, UK and Germany. The largest share of acquisitions focusing specifically on mobile companies was in China, demonstrative of the country’s rapid expansion in the mobile gaming start-up scene. Germany, meanwhile, saw an especially large focus on electronics and software. The vast majority of deals among the top five nations were for Internet-based firms.

In terms of the most successful portfolios, SV Angel saw the largest number of venture-capital backed exits in 2013, followed by the likes of Accel Partners and Index Ventures. Meanwhile, Yahoo acquired the largest number of tech firms that raised Series A or less of financing, with other prominent and highly active acquirers including Apple, Twitter and Cisco Systems.

With the start 2014 has already had, the figures are certainly likely to top 2013, suggesting corporate finance boutiques will be busy throughout the year. We at Acuity welcome the workload.


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