1.6

Thailand’s fertility rate has fallen to an average of just 1.6 children per woman, from seven in the 1970s, disrupting centuries of tradition in which children care for their parents.

(Source: Wall Street Journal)

$1 billion

The U.S. Justice Department is expected to announce a settlement with Toyota Motor Corp. as early as Wednesday that could cost the auto maker more than $1 billion to end a criminal probe into its disclosure of safety issues, people familiar with the matter said.

(Source: Wall Street Journal)

1.7 million

General Motors has recalled a further 1.7 million vehicles to fix a variety of problems, chief among them a wiring defect that could result in seat airbags failing to deploy.

(Source: Wall Street Journal)

30%

The incidence of colon cancer, declining since the mid-1980s, plunged a further 30% last decade among Americans 50 and older as more people had colonoscopies, a new study found.

(Source: Wall Street Journal)

$99

Amazon.com Inc. said it would raise the annual price of its Prime shipping and streaming-video service by $20 to $99, the first increase in its nine-year history.

(Source: Wall Street Journal)

$7.6 billion

Game maker King Digital Entertainment is planning to start trading this month on the New York Stock Exchange, valuing itself Wednesday at as much as $7.6 billion after it set a price range for its initial public offering.

(Source: Wall Street Journal)

Throughout the early 2000s, the median valuation of companies at IPO was approximately three times larger than it was for companies that were acquired, according to PitchBook data. The difference has been even wider in recent years—greater than 5x each year since 2008 and sitting at 6.5x in 2013.

There are obviously manifold reasons for this development, including that publicly traded stocks have been trading at higher multiples in recent years. Importantly, the increasing discrepancy between the two exit strategies’ valuations cannot simply be attributed to investors pursuing fewer but larger offerings. In fact, the median valuation at IPO has actually declined since 2011 as investors have capitalized on the recent strength in the markets to take more companies public; the 85 IPOs of U.S.-based VC-backed companies in 2013 is the most since the dot-com boom.

Another important consideration when comparing exit valuations is that many mergers & acquisitions will involve struggling companies, and some transactions may not even allow investors to recoup their entire investment. While there are exceptions, companies that go public tend to boast strong performance and strong future growth prospects, which naturally leads to higher valuations.

One notable outlier when it comes to valuations at exit comes in 2009, when the median valuation for VC-backed IPOs came in at a whopping $802 million. This may seem odd, given the low regard investors had for public equities during this period. However, considering that only top-notch companies would risk going public in those conditions, the lofty level of valuations seems more reasonable.

(Source: Pitchbook)

High-yield bond spreads have tightened significantly from the record-wide levels reached during the 2008 financial crisis. However, spreads are still wider than the lows reached in the 2005-2007 period. We believe that high-yield spreads may have some room to tighten further as credit is improving, economy continues to grow, there is a lot of cash on corporate balance sheets and defaults remain low.

(Source: Bloomberg)