First quarter UK tech sector M&As up more than 100% on 2009

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First quarter UK tech sector M&As up more than 100% on 2009

Warwick Ashford

The UK technology sector notched up the most mergers and acquisitions (M&As) in Europe in the first three months of the year, according to a report by Ernst & Young.

The number of M&A deals in the UK technology more than doubled in the first quarter compared with the same period in 2009, the latest Ernst & Young global technology M&A report found.

The 32 deals, compared with just 14 the year before, put the UK second only to the US for the number of M&As for this sector at the start of 2010.

The UK has risen from fifth position in Q1 2009 to second position in Q1 2010, followed by China, Canada, France, Japan and Germany

"The UK continues to be a hotbed of technology innovation," said Neil Hutt M&A technology partner at Ernst & Young.

With innovation driving so much recent M&A activity, it is hardly surprising to see that the UK is currently leading the way in terms volume of technology acquisition deals, he said.

The end of 2008 and most of 2009 were very quiet in terms of the volume of M&A activities, according to Hutt.

"But this trend has changed in Q1 with corporates and private equity both looking to pick up any new exciting technology businesses," he said.

Globally, M&A activity in the technology sector increased 14% in Q1 2010 even as high-cost technology deals were suspended.

The report predicts significant growth in technology M&A activity for the rest of 2010, but notes that so far the value of the average deal has dropped since the last quarter of 2009.

The drop in value is likely due to several factors, said Joe Steger, global technology transaction advisory services leader at Ernst & Young,

First, many of the deals in the first quarter have been small but strategic acquisitions.

Other factors include a traditional seasonal dip in fourth-to-first quarter values and the fact that some large companies that announced large acquisitions in the second half of last year are taking a break to integrate recent acquisitions, he said.

Global M&A activity in the tech sector was driven mainly by mobility, social networking, cloud computing, healthcare and clean energy, said Steger.


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