Mergers and Acquisitions Continue to Dominate Exit Scene for Full Year 2006

NEW YORK, Jan. 2 /PRNewswire-FirstCall/ -- Twenty-one venture-backed companies raised $1.835 billion through initial public offerings (IPOs) and 56 venture-backed M&A deals were reported in the fourth quarter of 2006 according to the Exit Poll report by Thomson Financial and the National Venture Capital Association (NVCA). The data reflect another year of heavy reliance on the M&A market for VC investment exits with a total of 58 venture-backed IPOs raising $5.3 billion in 2006 and 335 M&A transactions with a total disclosed value of $16.6 billion for the full year.

In terms of number of exits, 2006 venture-backed activity in both the IPO and acquisition markets varied only slightly from 2005 levels although these transactions realized higher valuations. The year 2006 marks the second strongest IPO year in terms of dollars raised out of the last six years and it is also the third strongest of the last six in terms of average IPO amount. The average acquisition value for a venture-backed company, for those deals where the acquisition price was disclosed, is the highest in six years at $113.8 million per deal.

There were 17 venture-backed IPOs on non-US exchanges for the year and three of those were in Q4.

        Venture-Backed Liquidity Events by Year/Quarter, 2001-2006

                     M&A Deals  *Total                      Total   Average
               Total   with    Disclosed  *Average          Offer  IPO Offer
               M&A   Disclosed    M&A     M&A Deal **Number Amount  Amount
  Quarter/Year Deals  Values   Value($M)  Size($M)  of IPOs ($M)     ($M)

  2001         353     165     16,798.9    101.8      41   3,489.9   85.1
  2002         318     152      7,916.4     52.1      22   2,109.1   95.9
  2003         291     123      7,726.1     62.8      29   2,022.7   69.8
  2004-1        80      45      3,921.0     87.1      13   2,721.1  209.3
  2004-2        89      48      4,514.6     94.1      29   2,077.8   71.6
  2004-3        86      47      4,142.8     88.2      24   3,225.6  134.4
  2004-4        84      46      2,862.2     62.2      27   2,990.4  110.8
  2004         339     186     15,440.6     83.0      93  11,014.9  118.4
  2005-1        82      46      4,364.9     94.9      10     720.7   72.1
  2005-2        80      36      4,791.0    133.1      10     714.1   71.4
  2005-3        98      47      4,374.8     93.1      19   1,458.1   76.7
  2005-4        87      39      2,563.7     65.7      17   1,568.1   92.4
  2005         347     168     16,094.4     95.8      56   4,461.0   79.7
  2006-1       104      48      5,384.4    112.2      10     540.8   54.1
  2006-2        92      37      3,747.6    101.3      19   2,011.0  105.8
  2006-3        83      38      3,679.3     96.8       8     934.2  116.8
  2006-4        56      23      3,801.8    165.3      21   1,835.1   87.4
  2006         335     146     16,613.0    113.8      58    5321.1   91.7

  Thomson Financial & National Venture Capital Association
  *  Only accounts for deals with disclosed values
  ** Includes all companies with at least one U.S. VC investor that trade on
     U.S. exchanges, regardless of domicile.


  IPO Activity Highlights

The largest IPO of the fourth quarter was the $204 million offering from NewStar Financial, Inc. Based in Boston, the debt capital solutions provider priced 12 million at $17 a share. Book Managers were Goldman Sachs and Morgan Stanley.

The perennial sector leader, Technology raised $916 million in public offerings, followed closely by the Life Sciences industry which captured $490 million. The Non-High-Technology sector priced three IPOs that accounted for $428 million.

In addition to the IPOs completed this quarter, there are currently 36 venture-backed companies "in registration" with the United States Securities and Exchange Commission. These companies have filed with the SEC in 2005 or 2006 and are now preparing for their initial public offerings. This is a decrease compared to the 51 companies in registration at the end of the third quarter of 2006. This compares with 57 companies in registration at the end of 2004 and 16 in registration at the end of 2005.

                        Industry Breakdown Q4 2006

                                          *Number of
                                        Venture-Backed  Total Venture-Backed
                Industry               IPOs in the U.S.  Offering Size ($M)
    Technology  Internet Specific           3                  258.5
                Computer
                 Software/Services          2                  129.5
                Communications/Media        4                  437.1
                Semiconductors/Other
                 Electronics                1                   91.0
                TOTAL                       10                 916.1
  Life Sciences Medical/Health              3                  144.6
                Biotechnology               5                  345.5
                TOTAL                       8                  490.1
      Other     Non-high Technology         3                  428.9
                TOTAL                       3                  428.9
                                  TOTAL     21               1,835.1

  Thomson Financial & National Venture Capital Association
  * Includes all companies with at least one U.S. VC investor that trade on
    U.S. exchanges, regardless of domicile

"The year ended strongly for the venture-backed IPO market as we had the highest quarterly volume in two years. However, one quarter does not mean we are out of the woods yet and ideally we would like to see more companies in registration if a recovery is in sight for 2007," said Mark Heesen, president, National Venture Capital Association. "There is the potential to see measurable Sarbanes-Oxley relief for smaller public companies in 2007, which would be a welcome boost for the US IPO market. In absence of this reform, however, venture capitalists will look at other liquidity paths -- foreign exchanges or sale to financial intermediaries -- as viable exit alternatives in the coming year," Heesen added.

Merger and Acquisition Overview

Total acquisition count declined in the fourth quarter for the third consecutive quarter although 2006 totals are similar to the prior several years. The average disclosed deal size for the fourth quarter 2006 was $165.3 million, an improvement from third quarter 2006 and almost triple fourth quarter 2005.

"Despite the lower acquisition volume in the fourth quarter, the overall acquisition volume for 2006 is comparable with 2005 and 2004", said Alex Tan, Global Private Equity Research Manager of Thomson Financial.

The Technology sector continued to dominate the venture-backed M&A landscape with 44 deals and a disclosed value of $3.2 billion. Within Technology, the Internet Specific sector had 15 transactions, followed by the Computer Software sector with 14 deals. Nine Life Sciences companies were acquired in the fourth quarter with a disclosed deal value of $141.2 million.

The largest disclosed deal of the quarter was the $1.65 billion acquisition of online video sharing services provider YouTube, LLC by Google, Inc. The second largest deal was Sybase, Inc.'s $425 million acquisition of Mobile 265, Inc., which provides inter-carrier messaging solutions for wireless communications.

                  Venture-Backed M&A Industry Breakdown

                                                      Q4 2006

                                                     Number of
                                                      Venture-     Total
                                        Number of    Backed M&A   Disclosed
                                        Venture-     deals with    Venture-
                                        Backed M&A   a disclosed   Backed
                Industry                  deals        value      Deal Value
                                                                    ($M)
   Technology   Communications/Media        8            3          527.6
                Internet Specific          15            6         1936.0
                Computer Software          14            4          474.0
                Semiconductors              4            1          180.0
                Computer Hardware           3            2          103.0
                TOTAL                      44           16         3220.6
  Life Sciences Medical/Health              6            3          107.5
                Biotechnology               3            2           33.7
                TOTAL                       9            5          141.2
       Other    Non-high Technology         3            2          440.0
                TOTAL                       3            2          440.0
                                   TOTAL   56           23         3801.8

  Source: Thomson Financial & National Venture Capital Association

Acquisitions which returned more than 10x the amount of the original venture investment comprised 30% of the disclosed transactions for the quarter. At the opposite end of the spectrum, 30% of the disclosed acquisition deals returned less than the total venture investment. The smallest percentage of deals was 4.4% returned -- 1-4x investment for the quarter.

          Analysis of Transaction Values versus Amount Invested

  Relationship between transaction value and investment            Q4 2006
  Deals where transaction value is less than total
   venture investment                                                 7
  Deals where transaction value is 1-4x total venture
   investment                                                         1
  Deals where transaction value is 4x-10x total venture
   investment                                                         8
  Deals where transaction value is greater than 10x
   venture investment                                                 7
  Total Disclosed Deals                                              23**

  Source: Thomson Financial & National Venture Capital Association
  ** Disclosed deals that did not have a disclosed total investment
     amount are not included.

  About Thomson Financial

Thomson Financial, with 2005 revenues of US$1.9 billion, is a provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (http://www.thomson.com/), a global leader in providing integrated information solutions to more than 20 million business and professional customers in the fields of law, tax, accounting, financial services, higher education, reference information, corporate e-learning and assessment, scientific research and healthcare. With revenues of US$8.50 billion, The Thomson Corporation lists its common shares on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).

The National Venture Capital Association (NVCA) represents approximately 480 venture capital and private equity firms. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy, and support entrepreneurial activity and innovation. According to a 2004 Global Insight study, venture-backed companies accounted for 10.1 million jobs and $1.8 trillion in revenue in the United States in 2003. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit http://www.nvca.org/.