Jeff points to two articles lamenting the exit opportunities for American VCs. With IPOs down, Jeff identifies three options: Non-US floatation (i.e. London's AIM), M&A, and Secondaries.
From a London perspective, I would say that AIM isn't even an exit. There are certainly benefits to listing on AIM, but on the balance it is still an underdeveloped market (although that is changing very rapidly) and provides limited liquidity. An AIM listing is not considered an exit by most investors here.
That leaves only two options...
The VC industry in the UK as well as Europe is going to increase. The number of business plans is increasing. The exit markets are definitely opening up. Last year over 30% of the exits were via trade sale. I was at a Private Equity conference a few weeks back and a prominent VC said about AIM, "that is not an exit route - you might as well dump the company if you are listing it on AIM"
Yes the number of AIM listings has considerably increased - actually significantly but this is not what does LP's are looking for from the VC's they invest in.
Trade sale is likely to continue to be the most popular exit route followed by a listing on LSE/Nasdaq. Period!
Posted by: Yousuf Khan | May 23, 2006 at 09:56 AM
AIM isn't Nasdaq yet- but it's gaining momentum. I completely agree that it's not an exit from an LPs perspective currently.
I think you're right about the levels of trade sales. I attended a conference yesterday which highlighted the increased M&A activity in the UK in 2005, with 2006 on target to match, if not beat last year's numbers.
That's one of the key considerations from the venture perspective- understanding where your exit is coming from drives how you grow your porfolio companies.
Posted by: Jason Ball | May 23, 2006 at 09:45 PM