UK technology industry sees drop in M&A deals
M&A deal values in the UK technology sector* dropped in Q3
2009 by 80% from the previous quarter according to leading
financial and business advisers, Grant Thornton.
The firm's M&A Technology Deals Tracker shows an 80%
decrease in deal values in Q3 2009, from £3.503bn in Q2 2009 to
just £656m in Q3 2009. The same period also saw an 18% decrease in
deal volumes. Q3 2009 saw 47 deals, down from 57 in the previous
quarter, the lowest volume since 1997.
According to the Tracker, both Q3 2009 deal values and volumes
are significantly down on the same quarter last year, which saw
values of £1.695bn with 84 deals.
Wendy Hart, Partner in the Technology Group at Grant Thornton
says, "Q2 2009 saw an unusual spike in deal value due to the merger
of US-based Thomson Reuters Corp and London-based Thomson Reuters
PLC in a stock swap transaction valued at £3.021b and TalkTalk
Telecom Ltd's acquisition of Tiscali SpA (Tiscali), a provider of
Internet communication services, for £236m."
"Overall in Q3, deal volumes and values were down in the
technology sector. In common with other sectors the market has been
hit by a significant reduction in the availability of debt. For
vendors, there has been no particular incentive to sell in 2008/09.
On the whole, acquirers are currently bargain hunting rather than
making strategic approaches.
"Looking forward, we expect to see an upswing in activity
amongst technology businesses. Funding is slowly becoming more
accessible and private equity houses are now more actively looking
for transactions. We have also seen a shift in business models with
a trend towards 'renting' models for hardware and software. One
approach to moving to this business model is to acquire," Hart
concludes.
* The data is provided by Thomson Reuters on 6
October and analysed by the Grant Thornton Technology Group.
Technology firm criteria: E-commerce/B2B, Internet Infrastructure,
Internet Software & Services, IT Consulting &
Services, Semiconductors, Software, Other Telecom,
Telecommunications Equipment, Telecommunications Services,
Wireless.