Saturday, 19 April 2008

Analysis of European Technology Acquisitions in Q1 2008

As most readers know, I am a non executive director of Regent - the tech M&A specialists. Regent has been compiling statistics on tech M&A deals in Europe for 15 years and therefore their knowledge of the trends in the sector is unrivalled. Indeed I have been reporting Regent's statistics for almost as long!

I therefore have great pleasure in providing HotViews readers below with a Preview of Regent's Analysis of European Technology Acquisitions in Q1 2008.

The results are interesting as they show for the first time how the "credit crunch" is affecting tech M&A. Mega deals - be they trade or private equity backed - are more difficult to execute. As indeed are IPOs. But smaller deals have been largely unaffected however they were funded. Changes to CGT rules in the UK have had a minor impact on the number of smaller companies selling up - but the effect on the European scene is almost insignificant.

Valuations seem to be holding up quite well but are still below the mid 2007 peak. Consolidation in the software and distribution areas continues apace. The most interesting finding is that the previous hottest area - Media and Content - is cooling.

The last few weeks has seen a significant recovery in tech stock indices - FTSE IT Index is up 6% this month and NASDAQ is up 5%. The outlook statements from the big players look pretty robust. Indeed these public statements have been supported by the private conversations I have had recently. I am not suggesting that we are on the cusp of a major boom but I suspect that 'steady as she goes' will be the watchword for the time being. I think that will translate into both volumes and valuations remaining steady for the rest of 2008.

When I spoke to Peter Rowell, Exec. Chairman of Regent, last night about this piece he commented “It is interesting to note that the story we read and hear in the news every day is about the lack of liquidity in the markets. Bizarrely, it is the abundance of cash within the technology industry and the private equity community that continues to drive the high levels of acquisitions. Reductions in end-user expenditure could cause the industry to batten down the hatches to fight any recessionary storm – but there are no signs of that just yet.”

Please feel free to forward this analysis to any of your contacts who would find it of interest or tell them to look on

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