We wanted to update our friends in the Semiconductor Capital Equipment Industry on our most recent completed transaction in the space:
Nanda Technologies acquired by Nanometrics, Inc. — On November 22, 2011 we closed the sale of Nanda Technologies to Nanometrics. Our client, Nanda Technologies, had retained GrowthPoint to locate a buyer for the company. Nanda is a developer of advanced technology in high-throughput, high-sensitivity defect inspection for semiconductor manufacturing.
Nanda’s technology captures full-wafer surface inspection images – at high-volume production speeds– allowing customers to achieve precise wafer inspection and 100% device sampling for today’s most advanced technology nodes. Nanda’s platform supports a wide range of surface materials and topographies, and is expected to address a $300 to $400 million served market opportunity that is incremental to the metrology segments currently served by Nanometrics’ optical process control products.
Nanometrics (www.nanometrics.com) is a leading provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of semiconductors, high-brightness LEDs, data storage devices and solar photovoltaics.
Nanometrics paid approximately $23 million in cash for Nanda. Nanda was a venture backed company that was founded in 2006 and had a team of 27 people in Munich, Germany.
Semicap Equipment M&A Comments – The founders of GrowthPoint have been active in the Semicap Equipment sector for M&A for over 17 years and we remain active in the sector. Some observations are relevant.
—The sector continues to mature and consolidate.. Coupled with the maturing of the industry, we see continued consolidation – 2011 saw some of the largest consolidation yet in the space with the Lam-Novellus merger and AMAT’s acquisition of Varian. There will be fewer and fewer companies in the semicap equipment sector and they will be quite large or highly specialized. Especially with the high rates of R&D and the large absolute dollars required to just remain competitive in this sector, it becomes increasingly difficult for the small and mid-sized companies to refresh technology and to survive the down cycles. The graph below illustrates a 3-year decline in the number of semiconductor capital equipment M&A transaction announced (and a sharp jump in transaction value due to the AMAT acquisition of Varian.
— The number of venture-funded semicap startups has significantly declined. As seen in the below graph, the number of semiconductor capital equipment companies funded by venture capitalists has undergone a steady decline. While this is not the happiest graph, it indicates that there should increasing scarcity in the market for semiconductor capital equipment businesses.
— Size matters. While we are very active in selling early stage and pre-revenue technology companies in the mobile and digital media sectors; it has become increasingly difficult to find buyers for early stage semicap equipment companies. In the words of one industry CEO: “buyers typically don’t want to start small and prefer to acquire $100M sized businesses”. While early stage semicap transactions can still be made, it becomes more challenging to close these deals each year. In our opinion, the importance of having an experienced advisor for transactions in this sector has never been more significant. We continue to believe that the technical depth and critical nature of the semiconductor capital equipment makes it a fascinating place for M&A, and GrowthPoint remains long-term committed to providing advisory services in this market.
The good news is that GrowthPoint remains committed to the sector and is available to assist semicap equipment companies when their investors decide to sell.