It seems tech dealmakers and investors should be optimistic as we step into the second quarter, what with Wednesday's successful IPO of LogMeIn Inc. (NASDAQ:LOGM) and a handful of other new offerings in the past couple weeks. (The Deal Pipeline subscribers can read more about the LogMeIn offering
here.) But leave it to empirical data and those who gather it to quash hope.
Overall, the second quarter looked pretty good, with the number of tech M&A deals and the aggregate amount spent hitting their highest levels since June 2008. But last month tells a different story, according to
figures from the 451 Group. While the 517 deals worth an aggregate $40.7 billion announced in the April-May period represented an average deal size of $78 million, that figure plummeted to $33 million (based on 233 deals and an aggregate purchase price of $7.7 billion).
Analyst Brenon Daly blames the drop in deal size on the fact that many deals during the month involved struggling tech companies.
On the IPO front, the National Venture Capital Association wasn't particularly rosy either. In second-quarter numbers it released Wednesday with Thomson Reuters, the group noted that while the number of VC-backed IPOs is the highest it's been since the first quarter of 2008, the thin pipeline of privately backed companies is troubling.
"It will be some time before we can even be in a position to return to healthy IPO activity levels," said NVCA president Mark Heesen.
Though we are all seeing
signs of stabilization, it seems the road back to some kind of normalcy is going to be a long one.
- Olaf de Senerpont Domis
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