European IT M&A downturn evidence of maturing market

Transactions are down on the last six months

A slowdown in merger and acquisition (M&A) activity in the European technology sector is further evidence of its emergence as a mature market, say experts.

Deal values for the first half of 2007 totalled $184bn (£90bn) - well behind the $221bn (£109bn) last year, according to investment bank Regent Associates.

And the 801 completed deals are five per cent lower than the 846 transactions in the previous six months.

The gentle downturn suggests a stability in marked contrast to the volatility characterised by the dot com boom, says Regent Associates chairman Peter Rowell. 'We are seeing the beginnings of a gradual slow-down,' he said. 'But there is still a good balance and the market is no longer based on new technology as it was 10 years ago.'

The number of mega-deals valued at $1bn (£0.5bn) hit the highest level for five years with 29 completed in the first half-year.

And the UK still leads Europe in terms of volume, with nearly a quarter of all completed M&A deals.

Acquisitions by private equity investors hit an all-time high of 16 per cent, leading to unease about the impact of a credit squeeze caused by the US sub-prime mortgage crisis.

But too much anxiety is premature, says Institute of Directors chief economist Graeme Leach. 'There is a lot of hysteria about the impact of the problems in the US, but it is all speculation,' he said.

A global credit crisis could affect Europe's IT sector, but the 2007 figures are not a cause for concern. 'We are seeing a natural downturn in a fairly stable market,' said Leach.