US takeovers of British tech companies rise by 50% in 2021

Government can intervene in foreign takeovers of UK high-tech companies with turnover below £70m as concern grows over overseas investors snapping up significant start-ups

US takeovers of British technology companies increased by over 50 per cent last year with a record-breaking 130 UK tech firms acquired.

Start-up researcher Beauhurst compiled the figures ahead of a shakeup in how Britain treats foreign takeovers of UK tech firms from tomorrow (January 4).

Until now the Government has not been able to investigate takeovers of companies with a turnover of less than £70m a year in most industries, limiting its ability to prevent promising players from being snapped up by US and other investors.

The new law, which takes effect on January 4, will remove this threshold and require companies of all sizes in areas such as advanced robotics, artificial intelligence and quantum computing to notify the business department if they are being sold to an overseas buyer.

The real problem, say experts, in trying to keep British successes such as DeepMind (bought by Google for $500m in 2014 – a price ex-Google CFO Patrick Pichette later admitted was “a steal”) in UK ownership given that pension funds do not invest anywhere the same amounts as institutional investors in the US and elsewhere in Europe.

>See also: Government to put brakes on foreign takeovers of UK technology

British companies also go public in the US, where investors are more open to enduring the years of losses a tech start-up can rack up before it makes a profit and becomes a unicorn – a company with a billion-dollar turnover.

Tobias Ellwood, Tory chairman of the Defence Select Committee, told the Daily Telegraph: “In the global push to become more strategically independent after Covid, America is doing an incredible job to the detriment of Britain.

“It goes against the grain of the Government’s wise long-term ambition becoming a high-tech superpower. That ambition isn’t supported by the current laissez faire attitude of allowing our key high-tech businesses to be purchased in this way.”

US companies are the biggest foreign acquirers of British tech firms, while American venture capital investment has also soared.

Further reading

UK tech investment accounts for one third of £76bn invested in Europe

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