VC-Backed M&A Holds Steady

When nursing home drug provider Omnicare Inc. last month agreed to buy hospice and pharmacy services provider excelleRx Inc. for $269 million in cash, the deal was celebrated in the offices of LLR Partners. The Philadelphia-based investor – along with Primus Venture Partners and Wachovia Capital – had invested $37 million, according to The MoneyTree Survey from PricewaterhouseCoopers, Thomson Venture Economics (publisher of PE Week) and the National Venture Capital Association (NVCA).

Mitchell Hollin, a partner with LLR, wouldn’t disclose the firm’s return on investment, but he says it was good. Hollin says the firm, which raised $360 million for fund II in January, expects to be selling off more assets from fund I.

“A healthy equity market is driving exits right now and M&A activity is robust,” Hollin says. “We’re hoping for an announcement similar to this every four to six months.”

The excelleRx acquisition, one of the first venture-backed M&A transactions for the third quarter, comes on the heels of Q2 in which VC-backed M&A transactions remained steady.

A total of 75 VC-backed companies were bought in Q2, with 32 reporting a combined value of $4.4 billion, according to figures released by Thomson Venture Economics and the NVCA. This compared with 79 deals in the first quarter, with a combined total value across 45 reporting companies of $4.2 billion,

The largest deal of the quarter was in the industrial/energy sector, with Antero Resources, a natural gas and oil producer, which was bought by XTO Energy Inc. for $842.9 million.