By Bryce Youngren, Partner, Polaris Partners
Polaris’ diversified investment strategy has been consistent throughout our sixteen year history. While this strategy may not work for all firms, it has served us well in 2012 as evidenced by the record number of successful exits we saw across our focus areas, and the record amount of liquidity generated for our Limited Partners.
Let’s look at the end of the year when two significant acquisitions occurred: deCODE Genetics (Saga, LLC) was acquired by Amgen for $415 million, representing a 6.1x multiple and 108 percent IRR in fewer than three years from the initial investment; and DigiCert was sold to private equity firm TA Associates, generating a 103 percent IRR on the growth-stage investment.
The deCODE Genetics and DigiCert acquisitions ended 2012 much like it began. In January, Avila Therapeutics was acquired by Celegene for $925 million. With $350 million in upfront cash, the transaction already represents a 5.6x multiple on the original early-stage investment.
In between these successful bookends, there were several other significant exits. Universal Health Services acquired Ascend Health Corporation for $500 million, resulting in a 10x multiple on the growth-stage investment. Thomson Reuters acquired MarkMonitor, generating a 3.3x multiple and 33 percent IRR on the early-stage investment. Warburg Pincus lead a recapitalization of Liaison International, resulting in a 3.6x multiple and 60 percent IRR on the growth-stage investment.
Adding to our record number of successful exits were Research In Motion’s acquisition of Paratek, eBay’s purchase of WHI Solutions, 3M’s purchase of CodeRyte, and Boston Scientific’s acquisition of Bridgepoint Medical. The total gross transaction amount of these exits combined approaches $3.2 billion.
Looking across these acquisitions we see great diversity in investment stage, as well as a strong balance between sectors. This is precisely the kind of investment diversity we seek to achieve. Note: You also see a distinguished list of acquirers—an important group of stakeholders validating the innovation being created for consumers by pioneering entrepreneurs.
In 2013, we are not worried if one sector is in or out. We simply focus on supporting our companies and their teams as they bring disruptive products and services to market.