Tech sector M&A slumps by a third

Deal valuations also down as merger activity falls to lowest level in seven years

Oracle's planned purchase of Sun was the biggest M&A deal in Q2

The number of mergers and acquisitions (M&A) in the technology sector fell by a third during the second quarter of this year, and now stands at its lowest level of activity in nearly seven years, according to advisory firm Icon Corporate Finance.

The company recorded just 915 deals during the period, down 10 per cent from the first three months of 2009, and well down in comparison to the approximately 1,400 M&As in the second quarter last year.

The last time the number of deals fell as low was in the third quarter of 2002, during the height of the post-dot com crash.

For those acquisitions that did take place, the transaction value also fell significantly, with the largest deal this year – Oracle’s planned £5bn purchase of Sun Microsystems – reflecting a value just half of Sun’s annual revenue. By comparison, the highest value by turnover was EMC’s £1.45bn acquisition of Data Domain, which was 7.2 times the target’s sales.

The largest UK M&A was Carphone Warehouse subsidiary TalkTalk’s purchase of rival ISP Tiscali for £236m.

Brian Parker, head of M&A at Icon, said the firm has recently seen an increase in both enquiries and deal flow, suggesting that market confidence is starting to rebuild.

“M&A activity in all sectors remains down year on year. However, there are some signs of recovery with the re-emergence of some larger deals,” he said.