Tech M&A boom over

In the opening half of 2007, 1642 deals were completed, which, the firm said, was in line with activity levels of the last two years. However, the decline of Q2 from Q1 suggests the boom times are coming to and end.

Peter Rowell, chairman of Regent Associates, said: “While we have no concerns that acquisition activity in the technology sector is about to grind to a halt, the indications are that after two years of stability, we are starting to see the beginnings of a gradual slow-down. We are probably just past the peak of the plateau.”

The report supports this contention firstly by highlighting that 16% of purchases have been made by private equity firms, a record for the tech sector, signaling a decrease in the number of trade acquisition. Secondly, the proportion of deals that are divestments from larger groups is up from the all time low of 27% last year which implies businesses are beginning a programme of house cleaning, albeit cautiously. Thirdly, purchases by American companies was just 12%, down from previous quarters, suggesting a taming of their global ambitions.

Total deal value for H1 2007 was actually up from the same period last year – US$187bn compared to US$117bn – but down from the US$221bn of the closing half of 2006. Mega-deals also increased, with 29 deals worth over US$1bn compared to 48 such deals in the whole of 2006.