European technology M&A had a record year in 2005, with a 103% increase in deal value and a 27% increase in activity on 2004, according to Regents Associates’ European Technology Acquisition Review.
Last year saw M&A deal value leap to US$272.1bn from US$134.22bn the previous year, spread across 3,053 deals compared to 2,405 in 2004. In Q4 2005 represented the eleventh straight quarterly increase in the number of acquisitions amongst European technology companies and the highest level of deal activity recorded in the 15-year history of the report.
Peter Rowell, chairman of Regent, said: “While at 3,053, the number of deals is well up on the levels experienced in the year 2000 bubble, the combined value at US$272bn is just one third of that achieved in 2000. We are seeing a very high level of transactions most of which are based on sensible commercial reality and structured on solid financial parameters. The current wave of transactions is being based on market fundamentals and not technology hype, which was the case in 2000”.
The report also shows evidence of consolidation in the industry, in particular in such sectors as systems integrators, product resellers, desktop services and fixed line telecommunication services.
Venture capital and private equity continues to play an important role in the technology M&A market. Technology investment organisations accounted for 13% of all acquisitions, and in many cases are acting as a lead regarding valuation levels. The number of exits by the investment community however was just 202 or 6.6% of the total of 3,053 deals.