Deal Data November 2009

No signs of a reviving deal economy in the November data. November was an unusual month where Maryland (paced by a large M&A deal) captured 87% of M&A volume and 71% of private placement volume (half of which was Biotech).  In general, in recent months, Maryland companies have been more in need of capital and are harvesting less value, while Virginia companies are harvesting more than they are attracting capital.  I think it is fair enough to say that the Biotech focus of Maryland versus the IT/Telecom concentration in Virginia coupled with the sorry state of overall investing explains this trend.  Biotechs have to have capital—you cannot walk away from a multi-year research and testing regimen.  But you can always trim back software development and sales.

Private Placements: After October was dominated by several gigantic placements, November came back down to earth to $135M of volume spread across a reduced number of deals.  There were only 14 placements above the $1M threshold versus 19 each in the previous two months.   Venture capital quality investments (as opposed to personal, corporate or unnamed sources of capital) were 13 of the 14.  That 13 is fairly representative of previous months.  The region is seeing 11 to 15 venture investments per month, with only 2 or 3 of those being new investments. Those three November new investments totaled $22M or about 17% of total venture investments for the month.  Media, Entertainment & Publishing surprisingly tied Biotech in November, each with 31% of total placement volume.  Media, Entertainment & Publishing was paced by a large investment in Motley Fool ($25M) followed by a new round for Millennial Media ($16M).  D.C. registered 3 small investments for the month.

M&A: The number of M&A transactions for the region in November stayed very low at only 7 above the $1M value threshold.  Of these seven, one deal represented 80% of the overall volume of $421M.  That was the sale of Maryland’s solar company SunEdison for $340M to publicly traded MEMC Electronic Materials.  (May I recommend a P/R firm for a basic name change if you are going to go solar?)  The remaining six averaged a meager $13M per deal.  Again, D.C. had several small transactions.  With so few transactions, there is no real trend to observe in industry concentration.

Public Offerings:  The moribund public markets showed a flicker of life locally, saved by a government sector IPO and secondary from Global Defense Technology & Systems, Inc. (Nasdaq:GTEC) for $39 million .  Otherwise you had your obligatory small bank in need of capital (SonaBank) and your thirsty Biotech company (Novavax Inc.).  That’s it.  One IPO/secondary and two follow-ons.

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