European IT acquisitions are scaling new heights

More than 800 deals recorded in third quarter

Consolidation of the European IT sector continues to surge, with the number of mergers and acquisitions recorded in the third quarter of 2005 exceeding the peak of the dot com boom.

Some 820 deals were recorded between July and September, more than the previous high of 781 set in the first quarter of 2000, according to figures published today (Thursday) by investment bank Regent Associates.

‘Last quarter was surprising,’ said Regent Associates chairman Peter Rowell. ‘We thought the second-quarter results couldn’t get any higher. July was quiet at first, but then it picked up again.’

Rowell says the current volumes are not an indication that the industry is overheating in the same way it did in 2000.

‘We are not seeing any bubble right now. There is a very solid level of activity, but it is in a controlled, planned manner, based on careful analysis,’ he said.

A total of 2,233 deals have been completed so far this year, only slightly fewer than the 2,405 completed in the whole of 2004, and significantly higher than the 1,595 recorded in 2003.

The content and media sector was the single biggest area of activity, overtaking computer services for the first time, with 562 transactions conducted so far in 2005.

But the market for initial public offerings (IPOs) has been rather muted. Just 64 technology companies have gone public so far this year, compared with 367 in the same period in 2000.

‘The dot com IPO bubble was driven by investor activity. Now the growth is driven by the industry, by executives with good understanding of the market,’ said Rowell.

John Higgins, director general of IT trade body Intellect, says the report’s findings mirror what members of his organisation have been saying. ‘Industry insiders see the true worth of the technology and related services, while the investment community remains uncertain,’ he says.