After Slow Streak, a Pickup for VC Exits?

Lately, when people asked me what I was writing about, my short answer was: nothing.

That’s because I’d been focusing on big  venture-backed exits. And, looking at the aggregate data, not a lot has been going on for the last month-and-a-half.

In the first half of this month, for instance, just one U.S. venture-backed company sold to an acquirer willing to say how much it would pay. (That was SenSage, a provider of security data analysis tools, which announced last week it will sell to The KEYW Holding Corp., for $34.5 million.) August had just one disclosed deal over $100 million (Sports site Bleacher Report, acquired by Turner Networks.)

But just when the slow streak was starting to seem interminable, this week kicked in with a flurry of acquisitions. Roomba maker iRobot kicked off the action by announcing it would pay $74 million for floor cleaning robot maker Evolution Robotics (the company previously raised about $16 million from backers including CMEA Capital and Idealab.) Game developers Gree and Zynga pitched in with a deal a piece, respectively snapping up App Ant Studions Inc., a mobile game developer, and A Bit Lucky, a digital gaming studio.

That said, the venture industry has not seen a big technology exit (say one valued at $500 million or more) for quite some time.  The last noteworthy high-dollar, high-return deal, by my records, was Nicira Networks, which VMware announced it will buy in July for $1.26 billion.

Talking to industry analysts and valuation experts in recent weeks, a couple of theories for the recent slow pace of M&A have emerged:

One we will call the “Facebook Reset Theory.” This hypothesis holds that the Facebook IPO has forced a sharp downward revision in the valuation of digital media companies, particularly in the eyes of large acquirers. While this hasn’t impacted smaller “talent acquisitions” it has caused a slowdown in larger deals, as buyers and sellers attempt to meet on readjusted terms.

The other we will call the “Summer Doldrums Theory.” This is the idea that even in the tech world, people do take vacation in July and August, so there’s apt to be less dealmaking. With fall, the theory holds, the pace should pick up.

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