Tech M&A market stalls

The value of acquisitions in the European technology sector for the first half of 2007 fell to $184 billion (£90.6 billion), 17 per cent down on the same period last year, according to research from investment bank Regent Associates.

The bank expects to see acquisition fervour in the sector cooling off over the next two years.

Peter Rowell, chairman of Regent Associates, comments: ‘Whilst we have no concerns that acquisition activity in the technology sector is about to grind to a halt, the indications are that after two years of stability, we are starting to see the beginnings of a gradual slowdown.’

Acquisitions by private equity hit an all-time high in the second quarter of 2007, accounting for 16 per cent of all deals. The research also shows valuations edging up, with the median price/earnings ratio of acquisitions now at 19.8.

Rowell adds: ‘There is possibly a window of 12 to 18 months before we can expect an overall slowdown in activity and consequent decline in valuations.’

Acquisition activity in the technology sector continues to be driven by three regions: the UK and Ireland, Scandinavia, and North America. Between them, they account for 56 per cent of all acquisitions of European technology companies.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

Related Topics