TECHNOLOGY M&A
A sign of things to come
With technology being one of the fastest-growing sectors in the UK, Hunter Ruthven examines the deal drivers behind tech M&A
T
here’s no doubt that the UK has embraced the technology sector and acknowledged the positive impact it can have on both the M&A market and the wider economy. The digital economy in Britain is now booming, with more money spent online per head of the population than any other country, according to management consultancy firm Boston Consulting Group.
In what was perennially the stomping ground for the US and its beloved Silicon Valley, the technology sector has bucked the trend of falling deal values and volumes that have stymied growth in other
sectors since the financial crisis, and posted year-on-year increases.
Between 2008 and 2010, research from Zephyr and Bureau van Dijk shows that the number of technology deals rose from 295 to 483, with annualised 2011 figures set to show a rise of 21 per cent on 2010 results (see Table 1).
In the same period, deal values have followed suit, with a 65 per cent rise in deals with known values (see Table 2) demonstrating the extent to which tech M&A has grown while other sectors have struggled to get through the big-ticket deals that bolster figures.
The recent acquisitions of Motorola
Mobility by Google and online video call software Skype by Microsoft bring into focus the mega-deals that are driving the tech sector. Worldwide technology M&A stands at $125.7 billion at time of print, the strongest year for M&A in the sector since 2007.
Simon Pearson, partner of technology M&A at Ernst & Young, says that the technology sector tends to be an area that is constantly changing: ‘There are always new innovations, new business models and new software being brought to the market, so it is never static.’
Examining the rise in technology M&A, Pearson says that some of this
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