M&A activity in UK technology plummets

The third quarter of 2010 saw technology mergers and acquisitions (M&A) activity descend back to recession levels

The third quarter of 2010 saw technology mergers and acquisitions (M&A) activity descend back to recession levels, according to research.

Advisory firm Grant Thornton says that deal values fell by 39% over the period compared to the second quarter, with number of transactions dropping by 44%.

The firm's technology M&A tracker suggests a decline in UK deals in technology from £1bn in the second quarter 2010 to £618m in the following three-month period.

The numbers also represent an 84% fall from the first quarter of this year, where deal values totalled £3.9bn.

Some 47 M&A transactions took place in the UK during the third quarter of 2010 compared to the 84 deals completed in the second quarter.

According to Grant Thornton, the latest numbers compare with the activity at the same time last year, when recession was at its peak in the UK

"The figures for the latest quarter show us that although recent private equity activity has helped the sector recover better than most from recession and the UK market has been the most acquisitive technology sector in Europe, the market is still proving tough and the road to recovery will be choppy," said Niki Dixon, partner in Grant Thornton's technology group. "The difficulty of securing debt finance continues to dampen activity," she added.

However, Dixon added that the sector may bounce back in the next quarter as large organisations continue to pursue strategic acquisitions and seek to expand in the software-as-a-service and cloud computing business areas.

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