Finish LineFor VC-backed companies, M&A is usually how the story ends.

Mike Walrath, 32, founded Right Media Inc. in 2003 as a New York-area consulting firm for buyers and sellers of internet advertisements. It wasn't long, though, before he created an online network where buyers and sellers could come together in a real-time internet ad auction. The concept caught on, and in 2005, VC firms started funding the company. After two rounds of venture financing, Right Media sold to Yahoo this spring for about $720 million. "We see this as the next logical step," Walrath says. "We don't talk about this as an outcome or an exit."

For the VC funds that nurture companies such as Right Media, however, acquisitions are typically an exit. Even with IPOs showing a small resurgence this year, M&A remains by far the most common exit strategy for venture-backed companies. "Even during the dotcom boom, more VCs were exiting through M&A than through IPOs," says Kurt Roth of Intercap Merchant Partners, a merchant banking firm. "That's always been true."