[WSJ] Why Biopharma Start-Ups Should Think M&A, Not IPO

By Timothy Hay

While the IPO window is slowly creaking open, biopharma start-ups and their investors are likely to get a better deal from an acquisition, as the country’s large drug companies are under increasing pressure to fill their pipelines with products.

Drug makers – many of which are about to see reams of patents expire – may be willing to pay more for a company than the public markets would deem them worth, as they are racing to keep their distribution networks stocked.

This is according to a study by Silicon Valley Bank, a major lender to and sometime-investor in privately held companies. It counts more than 50% of the country’s health-care start-ups as clients.

SVB released a report that examines last year’s exits from venture-backed companies, and overall the returns from these M&A and IPO deals were bleak. The median exit multiple from biopharma companies was 2.0, the lowest number since SVB began tracking exits in 1996.

Historically, venture capitalists have made the most lucrative returns from initial public offerings — in fact, during the 1990s, IPOs represented more than half of all exits for VCs across all industries.

But times have greatly changed in the past decade, and IPOs now make up less than 10% of overall exits — last year, there were 531 M&A deals and 46 IPOs, according to Dow Jones VentureSource.

In biopharma, however, the ratio of IPO to M&A is actually much higher — last year there were 13 IPOs versus 22 acquisitions (another seven went out of business). But according to SVB’s study, acquisition multiples have, on average, been more than double those for IPOs, despite an increase in the number of IPOs last year.

This suggests that some acquirers are paying a premium to the public-market worth of start-ups. And most biopharmas in recent years have struggled to hold IPOs at their hopeful prices.

A good example this year is Tranzyme Inc., which had to cut its offering price to $4 from an initial expected low end of $11, to get the deal done. At the same time, there have been several large acquisitions, such as this year’s deal for melanoma drug company Plexxikon Inc., which raised $67 million in venture capital before being acquired by Daiichi Sankyo Co. for $805 million in cash plus up to $130 million in milestones.

SVB also came out with a separate study on medical devices. These companies saw a second straight year without an IPO, the study found, but acquisitions climbed to a 14-year high with 30. There were also seven companies that went out of business. Regarding multiples, the device side was only slightly brighter than biopharma, with the median exit multiple at 2.8, the lowest since 2005.



[Đông Phương] Trung Quốc và Mỹ chia sẻ cơ sở dữ liệu M&A

More M&A data to be shared

2011-07-28 09:02

CHINA and the United States signed an agreement in Beijing yesterday to increase information sharing between government agencies in the world’s two biggest economies on cross-border mergers and acquisitions.

The nations aim to enhance exchanges on developments and potential changes to competition policy and law, according to the memorandum of understanding on antitrust and antimonopoly cooperation signed by the US Federal Trade Commission, the US Department of Justice, China’s National Development and Reform Commission, China’s Ministry of Commerce and China’s State Administration for Industry and Commerce.

China and the US have sought to strengthen ties as trade between the nations quadrupled in the past decade, and China passed Japan in 2008 to become the biggest holder of American debt. Chinese President Hu Jintao traveled to the US in January for the first full state visit by a Chinese leader since 1997.

“Deals between the US and China will continue increasing, and lots of deals will fall under antimonopoly laws,” Hubert Tse, a Shanghai-based partner at law firm Boss & Young, said yesterday. “It’ll benefit both countries if the agreement can work on a friendly basis.”

As part of the pact signed yesterday, the US and China will also cooperate on training programs, workshops, study missions and internships. Each of the agencies plans to appoint a liaison for facilitating contact, according to the agreement.

China’s commerce ministry received more than 130 merger and acquisition applications in 2010, “much more” than the previous year, according to a statement posted on the ministry’s website in January, which didn’t give more details.

The ministry blocked Coca-Cola Co’s US$2.3 billion bid for China Huiyuan Juice Group Ltd in 2009, with the ministry saying the takeover would have hurt competition in the nation’s juice and beverage market. The deal would have been the biggest foreign takeover of a Chinese company.

In 2010, Sichuan Tengzhong Heavy Industrial Machinery Co failed to win approval from Chinese regulators to buy General Motors Co’s Hummer brand.

[FT] Trung Quốc đạt kỷ lục M&A ra nước ngoài

China Inc: record outbound M&A

Please respect FT.com’s ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article – http://blogs.ft.com/beyond-brics/2011/07/27/china-inc-record-outbound-ma/#ixzz1TO8wvYl3

China Inc’s rumbling appetite for foreign companies can be heard across the globe. This is not new. But what is new are stats from number-crunchers Dealogic revealing that the number of Chinese outbound mergers and acquisitions activity is at an all-time high. This year to date no fewer than 217 cross border deals have been struck by Chinese companies.

But while more hands are being shaken, less money is being exchanged.

The total value of M&A deals is down 11 per cent this year at $US24.3bn, in spite of a 29 per cent increase in the actual number of deals.

The chart below from Dealogic shows the change in volume and activity over the last 6 years.



In terms of value and activity 2008 was a record year for dealmaking. Chinese companies paid $41bn in the comparable year-to-date period for a total of 26 deals. Seeing the economic downturn as an opportunity to buy distressed assets at cheaper valuations, Chinese companies popped out of the woodwork to snap up assets in developed countries.

Many of the deals signed at the time were resource-related, and the latest Dealogic data shows the oil and gas sector still tops the China M&A charts three years on.  A total of US$7.3bn worth of oil and gas deals have been inked this year.

Cnooc’s planned acquisition of Opti Canada for $2bn, announced last week and  still subject to regulatory approval, is the biggest deal to date.

It may come as little surprise that resource-rich Australia has been the most popular destination for Chinese companies so far this year. A record of 34 deals for a total of US$4.5bn  made Down Under.

Data also shows Chinese acquisitions are broadening beyond the oil and gas sector. Chinese firms on the hunt for greater control of global supply chains, have been particularly active in tech and engineering sectors.

The biggest Chinese outbound deal this year so far was China National Bluestar’s acquisition of Elkem, a Norwegian silicon supplier for US$2bn. As the FT’s Peter Marsh recently noted, firms looking to move up the value chain are targeting businesses in Europe with expertise in machinery, materials and specialised components.

Australia’s title as number one destination for acquisitions is followed closely by the US, where 33 deals have been made, and a total of $2.3bn has exchanged hands.

Yet while China Inc may have a reputation for being flush with cash and hungry for global assets, this fact doesn’t seem to have helped Chinese companies in the negotiating room.

Chinese groups are still having to pay a higher premium – measured by market cap a month before the deal is announced – for target acquisitions compared to their competitors in other countries, according to Dealogic.

Chinese companies on average pay a 28.8 per cent premium (which is up from last year’s 27.2 per cent year-to-date). This compares to a US average of 25.6 per cent, Japanese average of 26.6 per cent, and broader EMEA of 25.6 per cent and Asia (ex China) 26.6 per cent.

[Washington Technology] Intellectual property rules in today’s M&A market

Intellectual property rules in today’s M&A market

This year is on an outstanding pace in terms of completed deals in the government contracting sector with many different types of companies for sale representing many different attributes. However, the companies that are often securing the most attractive valuations are those that possess proprietary technology.

In a highly competitive government contracting procurement environment, where best price contracting increasingly is becoming the selection criterion over best value, possessing a technology differentiator is a valuable asset for companies striving to remain in the best-value contracting space.

Furthermore, as federal civilian and Defense Department budget priorities change, large contractors are increasingly faced with the need to replace revenue lost by cuts in larger platform initiatives with technology solutions in high-priority customer areas.

Combining the long sales cycle of the government with the requirement for the latest generation technology in much shorter cycles is a difficult challenge to resolve.

Often, reconciliation avails itself in the form of an acquisition of companies that have invested in developing and maintaining cutting-edge technology. Larger contractors are proving willing to acquire such companies because they then can more effectively and rapidly access and leverage larger pools of priority government spending.

Certain companies evolve from a purely services-based business model to one that incorporates a proprietary technology-based solution to solve a customer’s problems. Many of these companies invest in internal research and development to generate software/hardware-based solutions. Others rely on Small Business Innovative Research contracts which, once they reach the Phase III stage, are transferable to a large acquirer.

In earlier years, these companies may have derived the vast majority of their revenue from services. But as a company’s technology and solutions emerge, its business model changes into a combination of services and software licensing, for example, often with both being sold to the same customer as a total solution. Companies that have engaged in M&A transactions with this type of hybrid model include Data Technologies & Analytics Inc. and 3e Technologies International.

On the other hand, pure technology companies derive the vast majority of their revenue from software/product sales. Unlike services companies that have customers first and then design solutions for them, pure tech companies tend to develop solutions first and then approach the market with a sales and marketing plan.

Their challenge is winning customers and scaling the business to profitability. Excellent examples of this model in the cybersecurity space are Trusted Computer Solutions and NetWitness, both of which were sold recently to much larger acquirers, Raytheon and EMC respectively.

While each technology company is unique, the items upon which to focus in preparation for a successful sales process are fairly universal. The most important element is the company’s strongly articulated growth potential. Therefore, the focus should be on the size of the addressable market: substantiation that the company is solving a critical customer problem, providing customer validation (sales and pipeline of opportunities), differentiating its technology from that of competitors, and identifying the many potential revenue synergies that might exist with the technologies/customer reach of the prospective buyer community.

Many contractors are engaged to develop technology on behalf of the government. From a due diligence point of view, sellers must prepare to address buyer concerns over proof of ownership of the technology. Their contracts must be explicit and clear about their ownership of the technology and/or data rights.

Remember, when it comes to marketing technology companies, the five P’s of marketing should mean “Proper Preparation Promotes Premium Pricing.”

[www.mandadeals.co.uk] M&A Awards 2011

M&A Awards 2011

By Hunter Ruthven on July 26 2011

With a strong showing at the end of 2010, the past year has seen a resurgence in M&A activity as dealmakers completed a series of exciting and innovative transactions.

After four years of hard work weathering the storm of the recession, DFJ Esprit is now seeing some reward for its labours.

Following its foundation in 2006, the European fund has been busily acquiring in the technology, media, telecoms, medtech and cleantech sectors to build a strong portfolio to take to the exit market.

Simon Cook, chief executive officer of the venture capital fund, explains, ‘We have been able to demonstrate our ability to add value and get companies sold. We’ve generated significant capital returns to our investors, who have continued to back us.’

In a standout year for Cook, DFJ accounted for 54 per cent of total European venture capital M&A exits (excluding IPOs and biotech), with headline deals such as the sale of LoveFilm to entertainment retail giant Amazon seeing Cook scoop the M&A Dealmaker of the Year award at the annual M&A Awards.

Cook featured prominently in the development of LoveFilm, a movie subscription business, sitting on the company’s board and labelling the sale, which achieved an enterprise value of $367 million, his standout achievement of the year.

‘I was on the board of LoveFilm for many years and saw it grow from 10,000 to 1.5 million subscriptions,’ Cook explains.

Putting a successful 12 months behind him, Cook says that with a recently raised $150 million fund primed for action, DFJ Esprit can once again return to the acquisition trail with what he describes as a ‘number of exciting technology opportunities in the market’.


With the very best of the UK M&A world assembled at the Millennium Mayfair hotel in London’s Grosvenor Square, the awards afforded the opportunity to take stock of what was another difficult but prosperous year for many.

Before the takeover of accountancy software business Access, chief executive officer Chris Bayne had never been involved in an MBO or private equity transaction.

However, Access walked away with the Buy-out of the Year trophy after the judging panel commended the strength and speed of the deal.

Bayne describes the buy-out as a ‘win, win’ deal from the outset, with the initial idea for the £50 million purchase coming from the existing majority shareholder, to ensure the business was passed onto people he trusted.

In an unusual set of events, both the MBO team and the sellers used the same lead advisers, a move that Bayne believes was pivotal to ensuring the smooth running of the deal.

‘It was probably the highest-risk decision that we made, and the best one in fact, as it cut out all of the toing and froing. If we’d had a situation where our advisers had to talk to their advisers, it would have become very long and protracted,’ he explains.

Bayne says that the MBO team hasn’t really had time to come up for air since the deal in March but is excited about the performance of the business so far, with performance numbers more than living up to the predictions set out in the pre-deal proceedings.

The lack of confrontation and ‘point scoring’ is what Bayne believes resulted in such a smooth and successful deal – ‘there was no shoot-out’, he explains.

Following on from the Buy-out of the Year award being awarded to software business Access, elsewhere the technology sector continued in its relentless growth. It was then no surprise when TweetDeck picked up Small Company Deal of the Year for its sale to global social media giant Twitter.

The deal brought to the fore the importance of British start-ups, with TweetDeck having initially set up in Old Street, London, on the “Silicon Roundabout”.

Surrounded by other British ventures such as business card company Moo, online music database Last.fm and social online gaming business Mind Candy, the London tech hub looks set to build after a successful year.


This year’s Accountancy Firm of the Year category saw a highly competitive shortlist, with strong cases for firms such as Grant Thornton, Baker Tilly and Deloitte. However, it was BDO who picked up the prize with what Peter Hemington, partner at BDO, says was a testament to its ability to build on its global presence.

He comments, ‘Historically, like many competitors, we have been very strongly private equity-orientated, but what we have tried to do is lay on top of that a very strong corporate offering.’

One such deal that Hemington believes displays this approach was the partnership with building products supplier Wolseley, where he says BDO managed to achieve prices far in excess of what was expected in what has been a very competitive environment.

The Due Diligence Specialist of the Year prize was awarded to Pragma, which saw an increase in the volume of its commercial work.

Pragma chairman Roy Palmer says that one of the most gratifying and encouraging developments of the past 12 months has been the operational due diligence project that Pragma has taken on.

‘This is where people are asking us if we can help them to understand the underlying robustness of the business model itself,’ he explains.

‘Our client base now includes banks that don’t necessarily have an equity stake but are lenders in a particular sector and want to understand the robustness of, not so much the revenue model, but the ability of the management team and the business itself to deliver what is being required.’

In tapping into this new market, Palmer says that Pragma has expanded its team to include specialisations in supply chains and buying models, a position that he believes now gives the company a good grip over the retail sector.

It is this process which Palmer believes is important in addressing the increasing demand for a more comprehensive understanding of business performance below the surface.

In what was a telling year for the retail sector, with high-profile casualties such as Habitat, Jane Norman and TJ Hughes, it was perhaps surprising that two of the biggest awards of the night were picked up by high street fashion label SuperGroup and online clothing and apparel retailer Net-A-Porter.

After a highly successful and heavily oversubscribed listing on the London Stock Exchange, David Beckham-endorsed SuperGroup won the IPO of the Year gong, proving that the IPO market is far from shut.

Following the listing Supergroup has gone from strength to strength with shares now trading at double last year’s float price.

The £500 million sale to Swiss luxury goods company Richemont for Net-A-Porter, which netted founder Natalie Massenet £50 million, proved the stand-out transaction in the Large Company Deal of the Year category.

Luxury fashion has dominated the M&A market in recent months with deals for shoe retailer Jimmy Choo and Kurt Geiger providing stimulus to a sector which as seen stagnation on the high street.

2011 Winners

Accountancy Firm of the Year:

Winner: BDO

Shortlist: Baker Tilly, Deloitte, Grant Thornton, Mazars, RSM Tenon

Corporate Finance Boutique of the Year:

Winner: Regent Partners International

Shortlist: Beanstalk Management, Catalyst Corporate Finance, Clearwater Corporate, GP Bullhound, Livingstone Partners

Due Diligence Specialist of the Year:

Winner: Pragma Consulting

Shortlist: Armstrong Transaction Services, Calash, Crowe Clark Whitehill, Highwire Consulting, Saffery Champness Corporate Finance

Law Firm of the Year:

Winner: Olswang

Shortlist: DLA Piper, Eversheds, Kerman & Co, Memery Crystal, Nabarro, Pinsent Masons

Finance Provider of the Year:

Winner: Investec

Shortlist: Barclays Private Capital, GE, Inflexion, Kreos Capital, Leumi ABL, Lloyds Development Capital, Lloyds TSB Commercial Finance

Buy-out of the Year:

Winner: Access UK

Shortlist: Allied Glass, Lloyds Development Capital UK2 Group, Spice, Wagamama, Weldex

IPO of the Year:

Winner: SuperGroup advised by Seymour Pierce

Shortlist: Cupid advised by Cenkos Securities, Digital Barriers advised by Investec, EMIS Group advised by Cobbetts, iEnergizer advised by Arden Partners, Instem Life Sciences advised by Brewin Dolphin

Dealmaker of the Year:

Winner: Simon Cook, DFJ Esprit

Shortlist: Alex Chesterman – Zoopla,
Andy Currie – Catalyst Corporate Finance, Matthew Riley – Daisy Group, Sean Cooper – Better Capital

Large Deal of the Year:

Winner: Net-A-Porter’s sale to Richemont

Shortlist: Chrysalis’s sale to Kohlberg, Kravis Roberts & Bertelsmann, Coffee Nation’s sale to Whitbread, Maximuscle’s sale to GlaxoSmithKline, Morrisons acquisition of Kiddicare, Oakley Capital Private Equity’s disposal of Host Europe, TLC’s sale to Serco, Young & Co’s acquisition of Geronimo Inns

Small Deal of the Year:

Winner: TweetDeck’s sale to Twitter

Shortlist: Better Capital’s acquisition of Connaught Assets, Daisy Group’s acquisition of SpiriTel, Ebiquity’s acquisition of Xtreme Information Services, Oakley Capital Private Equity’s acquisition of Time Out, Phyworks’ sale to Maxim Integrated Products

[Sacramento Bee] Kevin Yamashita Receives 40 Under 40 Award

Kevin Yamashita Receives 40 Under 40 Award

Bertram Capital Partner Recognized as a Leading Dealmaker by The M&A Advisor

Published: Wednesday, Jul. 27, 2011 – 12:56 am

SAN MATEO, Calif., July 26, 2011 — /PRNewswire/ — Kevin Yamashita, Partner at Bertram Capital, has been recognized by The M&A Advisor as a winner in its annual “40 Under 40” award program.  Kevin was honored at a black tie awards gala at The Hollywood Roosevelt Hotel in Los Angeles on Tuesday, July 26.  The M&A Advisor’s 40 Under 40 Award Program recognizes leading mergers and acquisitions, financing and turnaround professionals who have reached a significant level of success in the industry while still under the age of 40.  The winners were selected by an independent committee comprised of business leaders from the mergers and acquisitions industry.

As a Partner at Bertram Capital, Kevin oversees all investments in the Industrial and Manufacturing sectors.  Since joining Bertram Capital in May 2007, Kevin has completed three platform and four add-on acquisitions.  The three platform company investments are Power Distribution, Inc. (PDI), TydenBrooks and Extrusion Dies Industries.  Kevin sits on the Board of Directors for all three companies.  Kevin’s work with PDI has resulted in the business more than quadrupling revenue and EBITDA in less than four years, and his involvement in TydenBrooks has contributed to the company doubling EBITDA in less than two years.

“The Bertram Capital team is extremely proud that Kevin has been recognized for his success and leadership in our industry,” said Jeff Drazan, Managing Partner.  “Kevin’s savvy dealmaking and strategic vision have supported Bertram Capital’s ascent to top decile performance in the middle market.  Kevin is a true team player and we are grateful he is an integral part of our firm.”

Prior to Bertram Capital, Kevin worked for TPG Capital, participating in notable transactions for Burger King, Petco, and Beringer Wine.  Kevin also worked at private equity firms Calera Capital and Yucaipa Companies, and began his career in investment banking for Salomon Smith Barney.  He graduated summa cum laude from UCLA.

In addition to his busy work schedule, Kevin is an active member of Cornerstone Fellowship and has been involved with the Orphans of Rwanda, Worldvision, Rohi Children’s Organization, Children’s Hospital, and The American Cancer Society.

About Bertram Capital

Bertram Capital is a private equity investment firm with more than $850 million in capital under management.   Founded in 2006, Bertram Capital’s mission is to build value for equity holders, employees, customers, and partners by helping already profitable companies realize their full potential.  Visit www.bertramcapital.com for more information.  

SOURCE Bertram Capital

Read more: http://www.sacbee.com/2011/07/27/3797088/kevin-yamashita-receives-40-under.html#ixzz1TO7kpzlk


[Reuters] Delhaize Group Completes Delta Maxi Acquisition and Becomes a Leading Retailer in Southeastern Europe

Delhaize Group Completes Delta Maxi Acquisition and Becomes a Leading Retailer in Southeastern Europe

* Reuters is not responsible for the content in this press release.

Wed Jul 27, 2011 11:30am EDT



BRUSSELS, Belgium, July 27, 2011 – Delhaize Group (Euronext Brussels: DELB – NYSE: DEG), the Belgian international food retailer, announced today that it has received the unconditional approvals of all relevant merger control authorities and has completed the earlier announced acquisition of the Serbian retailer Delta Maxi. Combined with its existing operations in Greece and Romania, the transaction makes Delhaize Group into a leading retailer in Southeastern Europe.

Pierre-Olivier Beckers, President and Chief Executive Officer of Delhaize Group, said: “This transaction fits perfectly in our New Game Plan, our strategic plan focused on accelerating profitable revenue growth. The addition of Delta Maxi combined with our existing businesses in Romania and Greece makes Delhaize Group into a leading player in the region. We are looking forward to growing our business in this promising part of Europe.”


“We are excited to welcome the 15 000 Delta Maxi associates to Delhaize Group and we are looking forward to continuing to serve Delta Maxi’s customers with the support of Delhaize Group’s international experience,” said Kostas Macheras, Executive Vice President Delhaize Group and Chief Executive Officer of Delhaize Group Southeastern Europe. “We are happy that we succeeded in completing the transaction within the planned timeframe. As from today, we can effectively integrate Delta Maxi into our Delhaize Group organization, something that we have been preparing already for a number of months. We are looking forward to continuing to build on the local strengths of the Delta Maxi stores and to strengthen the relationships with local suppliers.”


Delhaize Group has acquired Delta Maxi for EUR 932.5 million including net debt and other customary adjustments of EUR 318 million. In Serbia, Delta Maxi operates approximately 350 stores and is the largest food retailer. Delta Maxi began operations in 2000 and operates approximately 450 stores in Serbia, Bulgaria, Bosnia and Herzegovina, Montenegro and Albania. At the end of 2011, Delta Maxi’s five-country network is expected to count approximately 500 stores. The results of Delta Maxi will be consolidated in Delhaize Group’s results from August 1, 2011 and will be reported as part of the Southeastern Europe and Asia operating segment. The transaction includes a significant part of the real estate ownership of the stores in Serbia as well as seven of the distribution centers.


Immediately following the closing of the acquisition, Delhaize Group will start to integrate Delta Maxi fully in line with the strategic choices set forth in the New Game Plan. To that end, Delhaize Group will, over the next several quarters, focus on the development of clear strategic plans for pricing, assortment, branding as well as format management to ensure the continued successful growth in the region and to ensure the generation of more than EUR 20 million in net annual EBITDA synergies particularly from improved procurement, better inventory management and optimized finance, IT and supply chain systems and processes from the end of 2013.
» Delhaize Group


Delhaize Group is a Belgian international food retailer present in eleven countries on three continents. At the end of the first quarter of 2011, Delhaize Group’s sales network consisted of 2 816 stores. In 2010, Delhaize Group posted EUR 20.8 billion (USD 27.6 billion) in revenues and EUR 574 million (USD 762 million) in net profit (Group share). At the end of 2010, Delhaize Group employed approximately 138 600 people. Delhaize Group’s stock is listed on NYSE Euronext Brussels (DELB) and the New York Stock Exchange (DEG).

This press release is available in English, French and Dutch. You can also find it on the website http://www.delhaizegroup.com. Questions can be sent to investor@delhaizegroup.com.

» Contacts

Geert Verellen: + 32 2 412 83 62

Saskia Dheedene: + 32 2 412 96 11

Steven Vandenbroeke (media): +32 2 412 86 69

Amy Shue (U.S. investors): +1 704 633 82 50 (ext. 2529)

Milica Stojiljkovic (Serbian media – McCann Erickson Public Relations): +381 63 384 186