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European Technology Acquisitions

An analysis of technology transactions announced in the first half of 2004 involving European companies found a rapid increase in the number of acquisitions, says Regent Associates. The number of transactions was the second highest on record - only bettered by the heady days during the first half of 2000.

There was a rapid increase in the number of acquisitions in the first half of 2004 compared to 2003. The number of transactions was up 71% to 1118 compared to the 655 deals a year earlier. On a quarterly basis the deal flow is trending up with 513 acquisitions in Q1 2004 and 605 in Q2 2004.

The number of transactions in H1 2004 was the second highest on record - only bettered by the heady days during the first half of 2000. It is evident that this increase has been fuelled by the improving performance of the industry as a whole, brought about by the cost-cutting exercises of the past few years rather than revenue growth. IPO activity eased marginally in Q2 2004 with 19 against the 20 IPOs in Q1 2004. These are well up on a year ago but future activity, in the short term, looks less certain.

Q2 2004 witnessed strong growth in buying activity by French, Scandinavian and Benelux companies. In fact all countries/regions increased their acquisition focus with the exception of the UK. Although still the largest and most active market from a buyer perspective, the number of acquisitions by UK companies eased by 3% compared to the Q1 2004.

The fall is mainly as a result of the UK being ahead of the economic cycle. UK companies increased activity substantially in Q1 2004 at a time when most other countries were static. USA companies, which are further ahead in the economic cycle, accounted for about 15% of all deals.

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Regent Associates is Europe’s leading advisor to organisations in the information technology, communications and electronic media industries on all aspects of corporate development including, acquisitions, divestments, company sales, financing, valuations and strategic advice. With a successful track record of over 400 completed assignments, Regent’s client base includes many of the world’s best-known technology companies. Through European offices in UK, France, Germany, Italy and Spain, as well as in Israel, India, Australia and the USA, Regent handles assignments ranging from local deals to complex international transactions.