Four IT companies announced filed for IPOs over the past two days, despite continuing turmoil in the public equity markets. Jive Software, a social networking tool for businesses, filed for a $100 million initial public offering, as did Eloqua, a provider of revenue performance management software. Angie’s List, a website which offers consumers a way to review and rate doctors, contractors and service companies, filed to raise $75 million, while Brightcove, an online video publisher, filed to raise $50 million. [Update: SaaS customer reviews platform provider Bazaarvoice has also filed for an $86 million IPO.]
An open and active IPO market is clearly good for M&A. Higher public market valuations generally mean bullish buyers, which will value acquisition targets with the same enthusiasm. This also creates opportunities for a company which has filed to be picked off by a strategic buyer. There have been five such IT companies acquired already this year, the most prominent of which was the $8.5 billion acquisition of communications provider Skype by Microsoft in May.
Companies filing for IPO are also making significant plays as buyers. Of the IT companies that filed in 2010, 12 have made at least one acquisition since filing – accounting for 19 acquisitions already in 2011. While some of these companies have gone public since then, others are either still holding off, or decided to withdraw. These include the high-profile social companies such as Zynga and Groupon more recently, but also content company Demand Media, mobile health software provider Epocrates, and marketing firm Affinion Group.
The equity markets are still down significantly year-to-date, but August is witnessing its most active M&A month ever. This week’s aggressive IPO filings are a good sign that confidence remains. The more liquidity available for these companies, the better the M&A landscape will be moving forwards.