Partner Article

Hi-tech optimism for the coming year

A RECENT survey on UK technology companies has indicated that technology leaders are more optimistic about mergers and acquisitions in the next 12 months.

Deloitte’s biannual survey of UK technology companies highlighted an increase in optimism from 53% to 60% compared with 6 months ago.

The survey looks at technology M&A and capital market trends for 2010/11 and measures forward looking expectations.

There is an expectation that there will be a more competitive auction market, with increased private equity activity, particularly focused on companies serving SMEs.

Only 26% of respondents thought distress driven deals were a driver of increased activity, compared to 40% six months ago. This suggests that the time for opportunistically picking up a target cheaply may have already passed.

David Wilkinson, technology partner at Deloitte in the North East, said: “It is encouraging that M&A optimism has increased, even if some of the significant premiums paid on a number of well-publicised deals may lead to some prospective acquirers deciding to sit things out.

Cash rich corporate acquirers continue to consolidate the market with an accelerated migration towards cloud related technologies.“

UK technology leaders singled out four areas for premium valuations: virtualisation technologies, mobile applications, analytical/ diagnostic software and security software.

The impression remains that the market will continue to be driven by overseas acquires with 90% believing that US Companies remain the dominant overseas purchasers with an increase in interest from Indian and Chinese companies expected over the next year.

Commenting on the findings, Neil Stephenson, CEO of Stockton based Onyx, said: “ It shows that the market that we are in is buoyant. It shows modern technology is growing and developing which is good for anybody in this region.

“It will attract new people into he market, it will create jobs and bearing in mind we are trying to move the economy away from the public sector area into the private sector, hopefully that creates a boost in the technology space.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .