Mergers & Acquisitions

Mergers & Acquisitions

October 05, 2011

Lux Research Report Examines Changes in VC and Acquirers Approachs in 2011

According to Lux Research, which provides strategic advice and on-going intelligence for emerging technologies, the number of merger and acquisition deals completed in the first six months of 2011 has been twice those made during the entire period of 2010. It is likely this number will continue to grow as more start-ups are auctioned off.

The report entitled “Bargain Shopping—Acquisitions are Crucial as VCs Pass-Over Grid, Storage and Vehicle Ventures" tracks trends in six key technologies, basing its analysis on over 712 VC, M&A and IPO transactions through June 30, 2011. More than 219 companies in 24 countries were involved.

Analysts at Lux Research attribute this slowdown in 2010 to inadequate venture funding for start-ups. Although funding reached an all time high in H1 2010 reaching $1.79 billion, the next twelve months (from July 2010 to June 2011) produced only $1.54 from venture capitalists.

M&A transactions totaled $2.42 billion in the smart grid, energy storage, and EV start-ups sectors during the first half of 2011, with only 13 transactions during 2010 and 12 transactions during the first half of the year in 2011

In a press release, Steve Minnihan, a Lux Research Analyst and the report's lead author noted that when venture capitalists withdrew from the early-stage ventures, many start-ups were left stranded with no means to even fund their pilot demonstrations. Major, well-fed competitors and corporate players swallowed the struggling small companies.

Venture capitalists then turned their attention to maturing companies. As a result, seed funding and series A deals literally disappeared from the scene. Automotive and fuel cell companies were beginning to be noticed by venture capitalists and accounted for 66 percent of all VC spending in 2011.

In the case of acquisitions, acquirers were on the lookout for low-value acquisitions with high commercial potential.

Mini Swamy is a contributing editor for TMCnet. To read more of her articles, please visit her columnist page.

Edited by Jamie Epstein

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