Buzz: Are Acquisitions Replacing IPO’s

Tim Draper and Brad Feld have a variety of interesting observations in a recent Always On panel. One of the topics discussed is about the IPO/acquisition exit mix. Historically, this number has been around 20-25% IPO and 75-80% acquisition. Today, IPO’s make up less than 10% and dropping (and this includes overseas IPO’s). Tepid markets, SOX and other factors are really putting a damper on tech IPO’s. Since IPO’s are usually a great stalking horse for acquisition talks and they usually enjoy around a 50% premium to acquisitions, without them, exit valuations continue to fall. Do more with less capital since the exits aren’t as strong as they have been historically. Let’s hope things turn around…