On Tuesday, I talked to James Slavet, one of the partners for the Internet consumer side of venture capital firm Greylock
Partners.  He certainly knows how to spot breakout companies, some of which have included Pandora (NYSE:P), Facebook, LinkedIn (NYSE:LNKD) and Groupon.  But just as importantly, his team also has a good sense for the right exit.

While IPOs are great, Slavet said that an eventual acquisition is by far the more likely option.  For example, he has helped sell
Farecast to Microsoft (Nasdaq:MSFT) and Kongregate to GameStop (NYSE:GME).

His latest deal came this week, facilitating the sale of Auditude to Adobe (Nasdaq:ADBE) (for an undisclosed price). Auditude is a top player in video ad management, with clients like News Corp.’s (NYSE:NWS) Fox, Major League Baseball and Comcast (Nasdaq:CMCSA).  “When we invested in the company in 2007,” said Slavet, “we saw a major shift to premium web video.”

But the first couple years growing Auditude required substantial focus on building out the technology.  For example, a key differentiator was developing a yield management system, which allowed for selling unsold advertising inventory at an efficient price.

So far, it has been a smart strategy: Over the past year, Auditude’s revenue has spiked fourfold.

With all that success — and the massive market opportunity — why sell out?  Interestingly enough, Auditude was not thinking acquisition. It was Adobe that originally proposed the idea.  “Both Auditude and Adobe have been working together on video technologies,” said Slavet.  “The relationship has been strong.”

Adobe also has been making long-term investments in the video space.  In fact, the company plans to immediately double the headcount at Auditude.  What’s more, Adobe said it would also integrate the technology across its two main online divisions, which include analytics and Flash.

“Without a sale to Adobe,” Slavet said, “we would probably have to do a final round of capital.  Then the decision
would be between an acquisition or an IPO.”

In other words, why not sell now when a strong partner existed like Adobe?  Given the fickleness of the IPO market as
well as the intensely competitive landscape — which includes companies like Hulu — the acquisition exit can certainly be a smart option.