Technology mergers and acquisitions increase as recovery begins

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Technology mergers and acquisitions increase as recovery begins

Simon Quicke

Merger and acquisition activity among IT suppliers is expected to rise this year after hitting a six-year low, in another sign of economic recovery.

The number of deals in the UK last year dropped by 60% with the value 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 headline-grabbing M&A deals, according to research by PricewaterhouseCoopers (PwC)

The company is predicting the impact of a return of confidence following a series of mega deals in the US .

"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 increased M&A activity," he said.

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 IT industry acquisitions in 2009

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

Source: PwC

IT services will not recover until 2011 >>

A version of this story appeared on MicroScope.co.uk.


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