Venture-backed biotech generates quicker exits but lower multiples than medical device

Silicon Valley Bank (SVB), financial partner to innovative technology and life science companies worldwide, has released a study that examines the merger and acquisition behavior of private, venture capital-backed biotech and medical device companies.

Based on an analysis of private merger or acquisition transactions of US venture-capital backed companies (60 biotech and 58 medical device) since 2005, SVB found several conclusions about investments in life science companies that counter conventional wisdom. SVB's study included private life science M&A activity in excess of $50 million for device companies and $100 million for biotech companies.

"We feel like we are myth busters," said Jonathan Norris, managing director of SVB Capital's Venture Capital Relationship Management team. "Our research shows that many of the basic assumptions upon which life science investors base their decisions do not hold true in the current market. We wanted to look at the big deals - the winners - and learn from their common characteristics. We were definitely surprised by the results and think this report will have an impact on some firms' life science investment philosophies," he added.