IT mergers reach all-time high
M&As in technology sector surpass height of dot com boom
More European technology mergers and acquisitions (M&As) took place in the second quarter of this year than in any other equivalent period, according to research published today.
Investment bank Regent Associates’ European Technology Acquisition Review for April to June 2006 shows 846 deals were completed in the quarter.
Following a slight fall in the first quarter of 2006, the second quarter saw a continuation of a three-and-a-half year climb in technology acquisitions, and significantly more than at the height of the dot com boom.
‘We are seeing a continuous increase in deals, but it does not mean we are in a bubble,’ said Regent Associates executive chairman Peter Rowell.
‘I think this is solid and sustainable activity driven by companies that are performing well, are confident in the future and looking at business strategy.’
The survey of 10 European technology sectors reveals that the UK is still the most active country, accounting for 24 per cent of M&As.
The number of deals increased seven per cent on the first quarter of this year and 16 per cent on the same period last year, while the total value for the first six months of 2006 topped $220bn (£121bn), more than double the same period last year.
Rowell says there may be a dip in acquisitions in the years to come, but it will not be as substantial as in previous years.
‘The technology industry is closely aligned to the global economy,’ he said. ‘I think any dip will be caused by a general economic slowdown.’
David Roberts, chief executive of user group the Corporate IT Forum, says the market is buoyant, with new technology more rapidly available for acquisition.
‘We are also dealing with more procurement in all countries, which has expanded the number of M&As,’ he said.
A separate report covering the same period, released this week by consultant Ernst & Young, says software and computer services firms top the list of businesses issuing profit warnings.
‘The price expectation of many suppliers is still unreasonable compared with the price customers are willing to pay, and suppliers will need to adjust,’ said Roberts.
M&A activity
z There were 846 completed mergers and acquisitions in the second quarter of 2006, a seven per cent rise on quarter one (790), and topping the previous high of 828.
z The total value of all deals in the first six months was $220bn (£121bn), more than double the same period last year.
z For the first half of the year, there were six acquisitions totalling more than $10bn each, compared with none in the same period last year.
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Further reading
2005 acquisitions break records