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Tech M&A activity set to return

Microscope contributor

Signs of recovery in the technology market continue to pileup with the level of M&A activity expected to rise this year after hitting a six year low.

The level of deals in the UK last year dropped by 60% with the value also reducing from €6.8bn in 2008 to €3.3bn last year, taking the overall activity in the market to the lowest levels since 2003.

But the market is expected to bounce back with a prediction of a return to headline grabbing M&A deals, which comes a day after Grant Thornton predicted a rise in the valuation of technology companies.

PricewaterhouseCoopers (PwC) is predicting the impact of a return of confidence and the continuing ripples from some of the mega deals in the US will awaken some spenders in the market.

“The right conditions appear to be in place [in the UK] to mean a tipping point into the next stage of the deal cycle and local confidence is starting to return,” said Andy Morgan, partner at PwC.

“The real hotspot in the world of applications is software-as-a-service as organisations see the benefits of moving large scale software expenses from their capital budget to their operating budget, which will certainly drive increase M&A activity,” he added.

The other feature of the market that has been put on hold during the recession but should restart is the amount of private equity buyers and sellers moving into the tech market.

UK Top 10 Tech Deals 2009

Feb 09 - €1,915m NDS Group plc acquired by Permira Advisors ltd
Nov 09 - €267m Playfish ltd by Electronic Arts
Jan 09 - €140m Abacus Group plc by Avnet Inc
Aug 09 - €132m Exchange FS ltd by Lloyds Development Capital ltd
Apr 09 - €95m Eidos plc by Square Enix Holdings
Dec 09 - €84 Synetrix (holdings) ltd by the Capita Group plc
Mar 09 - €81m Snell & Wilcox ltd by Nuance Communications Inc
Dec 09 - €71m SpinVox ltd by UnitedHealth Group Inc
Nov 09 - €41m Carillion IT Services ltd by the Capita Group plc

Source: PwC


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