European Tech Exits Report Q2 2016
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EUROPEAN TECH EXITS REPORT Q2 2016 INTRODUCTION Since we started, one of the key aims of the team at This report mostly focuses on acquisitions, IPOs and Tech.eu has been to track all of the funding rounds and mergers involving venture-backed companies. exits in Europe, providing the most comprehensive and accurate record and analysis of the European technology This report does not include investment activity in the scene. biotech, pharma and cleantech sectors. We do this by meticulously monitoring hundreds of We’ve worked to make this report as comprehensive and sources, across multiple languages and regions. valuable as possible. Please don’t share it publicly without written consent. Please refer to the end of this During the last 12 months we’ve published multiple report for methodology and disclaimers. For any reports focused on the funding and M&A markets at a questions or comments regarding the report we invite Europe-wide level, as well as country and vertical specific you to email [email protected]. reports. This report was written by: This report focuses on the European, Israeli and Turkish exit activity in Q2 2016. • Jaime Novoa, Analyst at Tech.eu • Robin Wauters, founding editor of Tech.eu In this report we take an in-depth look at the local exit markets in the second quarter of 2016, we discover the bigger startup exits in the old continent, as well as the investors that participated in such deals. 2 INDEX Introduction 2 Top 10 VC-backed exits in Q2 2016 19 Index 3 Which investors had the most exits in their portfolio in Q1 2016? 20 Key Q2 2016 Exit Takeaways 4 Notable exits 21 Q2 2016 Exit Analysis 5 Notable exits: Supercell 22 Key trends 6 Notable exits: Paradox Interactive 23 Exit activity by quarter (VC-backed or not) 7 Notable exits: Withings 24 Type of exit activity by quarter (VC-backed or not) 8 Notable exits: Ticketbis 25 Exit activity by country 9 Notable exits: Onefinestay 26 Top 10 exits in Q2 2016 10 Other notable European exits 27 How many of the exited companies were VC-backed? 11 A closer look at country-specific exit activity 28 VC-backed exit activity by quarter 12 Israel 29-30 Type of VC-backed exits by quarter and total capital involved 13 Sweden 31-32 A closer look at VC-backed IPOs by quarter 14 UK 33-34 Number of VC-backed exits by size of transaction and by vertical 15 France 35-36 VC-backed exit distribution by capital raised at the time of transaction Germany 37-38 16 size and exit ratio European M&A landscape: Future predictions 39 Location of VC-backed acquired companies and acquirers 17 What does the future hold? 40 US involvement in VC-backed exits 18 Methodology and disclaimers 41-43 3 KEY Q2 2016 EXIT TAKEAWAYS 4 Q2 2016 EXIT ANALYSIS KEY TRENDS Contraction in funding and contraction in exit activity Internet, Just Eat and Zalando hit the public markets. Following a record-breaking first quarter for European tech, With abundant capital in the market, including at the late and mostly in terms of investment activity, the region’s various growth stages, companies continue to postpone going public, technology ecosystems saw a drop in both funding and exit opting instead to remain private and avoid the scrutiny of the activity in Q2 2016. public markets. Total exit value, including both venture-backed and non-venture- In Q2 2016, there were four IPOs, which combined for almost backed technology companies, stood at €22 billion, down from €450 million, the second-lowest amount since the beginning of €24 billion in Q1 and €28 billion in the same quarter a year ago. 2015. Measured as total number of deals, Europe and Israel as a whole also experienced a contraction in exit activity. US participation in exits and Germany’s dominance In terms of venture-backed companies, the same trends apply. Germany saw the highest number of venture-backed exits in the All in all, 75 private companies which had received funding from region in Q2, at 16, followed by Israel, Spain and the UK. investors exited in Q2 2016, combining for €2.4 billion; both figures represent a slight quarter-on-quarter decrease. US-based companies continued to be the main acquirers of their overseas counterparts, accounting for 22 of the region’s VC- Companies continue to choose to stay private longer, avoiding backed acquisitions. Interestingly, the involvement of US the public markets technology companies in European exits went up, both measured as a percentage of all deals and exit value, after Europe has not seen a +€1 billion IPO from a technology several quarters of continued drops. company since 2014, when local powerhouses such as Rocket 6 ANALYSIS Exit activity by quarter (VC-backed or not) €35 200 Number of deals 180 €30 Billions 160 • The combined value of all European and Israeli tech exits decreased for the second consecutive quarter €25 140 120 €20 100 • Q2 2016 was a down quarter for Europe and Israel in terms of €15 fundraising activity, and the same happened in the M&A and 80 IPO markets. Total exit value reached €22 billion in the €10 60 second quarter of 2016, 8% and 21% less than in the previous 40 quarter and year ago period, respectively €5 20 €33 €33 €7 €18 €27 €28 €19 €29 €24 €22 €- 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 • In the first half of 2016, liquidity events from local technology 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 companies reached €45 billion, versus €55 billion in the first Exit volume Exit deals half of 2015 Exit deals Exit volume • The number of exits also decreased versus the previous quarter. However, it’s worth noting that the number of M&A YoY change -2% -21% transactions and IPOs have increased significantly compared QoQ change -7% -8% to 2014, from 102 in Q2 2014 to 165 in Q2 2016 7 ANALYSIS Type of exit activity by quarter (VC-backed or not) 200 180 • In Q2 2016, there were: 160 • 147 acquisitions 140 • 11 mergers Number of deals 120 • 7 IPOs 100 80 • The number of acquisitions decreased in the second quarter 60 of 2016, from 164 in the first quarter to 146 in the most recent 40 period, a -11% drop 20 0 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 • On the other hand, both mergers and IPOs increased on a 2014 2014 2014 2015 2015 2015 2016 quarterly basis 2014 2015 2016 Acquisition IPO Merger • As the graph shows, and as highlighted in the previous slide, Acquisition IPO Merger the number of exits in Europe and Israel has remained stable over the past six quarters YoY change -3% -30% -38% QoQ change -11% +17% +22% 8 ANALYSIS Exit activity by country Location of exited companies Location of buyers • In Q2 2016, 33 German companies were involved in an M&A Germany 33 US 44 transaction or hit the public markets, the highest number in Europe with a significant advantage compared to Israel, Israel 20 Germany 22 which came in second with 20 total exits Sweden 18 France 15 • Sweden, Spain and the UK rounded the top five, with 18, 18 Spain 18 UK 10 and 17 exits, respectively. France was the only other country UK 17 Sweden 7 in Europe to surpass the 10 exits milestone in the second quarter of 2016 France 12 Russia 7 Russia 8 Denmark 7 • 17 different countries in Europe and Israel saw at least one exit in the period Switzerland 7 Spain 6 Denmark 7 The Netherlands 5 • US-based companies continued to be the main acquirers of The 6 their overseas counterparts, accounting for 44 exits. Germany Netherlands Israel 5 and France were second and third, respectively, as a consequence of domestic deals 9 ANALYSIS Top 10 exits in Q2 2016 All industries Internet/digital sector • Finland-based gaming powerhouse Supercell was Supercell (FI) €9,100 Supercell (FI) €9,100 responsible for the largest exit in Europe and Philips Lighting (NL) €3,000 Qlik Technologies Israel in Q2 2016. Tencent acquired an 90% stake (SE) €2,700 in the company, which was previously owned by SoftBank, valuing it at €9.1 billion Qlik Technologies (SE) €2,700 Premier Farnell (UK) €860 Saft (FR) €950 Xura (IL) €584 Premier Farnell (UK) €860 • The lightning division of Philips, valued at €3 Privalia (ES) €500 billion in an IPO, and Qlik Technologies’ Yoigo (ES) €612 Paradox Interactive acquisition by private equity firm Thoma Bravo for (SE) €377 €2.7 billion, were the two other larger exits of Q2 Xura (IL) €584 SintecMedia (IL) €363 Privalia (ES) €500 Apical (UK) €318 • In terms of pure internet and/or digital companies, Paradox Interactive (SE) €377 it’s worth noting that three different Israeli CloudLock (IL) €266 companies ranked in the top 10, the largest SintecMedia (IL) €363 number for any single country Withings (FR) €170 Million Million 10 ANALYSIS How many of the exited companies were VC-backed? • 48% of all exited companies in Q2 2016 had previously raised 100% funding from venture capital firms, virtually the same rate as 90% in the previous quarter 80% 70% • This means that the number of European and Israeli VC- 60% backed companies being acquired or floated on the public markets continues to be on the rise, especially when 50% compared with previous quarters in 2014 and 2015 40% 30% 20% • In total, 75 VC-backed companies were acquired in Q2 2016, the second highest amount since the beginning of 2014, only 10% surpassed by 86 venture-backed companies that were 0% involved in an exit in Q1 2016 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 VC-backed Non-VC backed 11 ANALYSIS VC-backed exit activity by quarter €18 100 Number of deals €16 90 80 Billions €14 • Liquidity events for VC-backed technology companies in €12 70 Europe and Israel was also down on a quarterly basis.