Member Article

Technology remains buoyant after strong 2011

In 2011 the technology market was buoyant, with a total deal value of €69 million - though still has a way to go before reaching 2010 levels.

Long-term mega trends are impacting on the way technology providers address the changing needs of business, governments and consumers, and businesses are now focusing on making strategic acquisitions for maximum impact.

Last year 354 deals took place, 10% less than the 393 witnessed in 2010, but this figures is still 90% higher than the 2009 low.

Commenting on the figures, Paul Mankin, partner in Corporate Finance in the North East said: “Cash remains king. At a time when debt is hard to raise those with cash are doing deals – and technology companies, particularly at the larger end of the market, have significant cash reserves which they are looking to deploy through M&A.”

The top ten deals of the year also indicated that corporate and private equity buyers were both prepared to deploy substantial sums of equity in the fourth quarter, at which time capital makerts were in hibernation. Three of the four largest deals were also found to be completed in the fourth quarter.

Mr Mankin continued: “A clear trend in 2011 has been the increased value placed on Intellectual Property with patent acquisition being the driver behind a number of deals, particularly in the area of mobility.

“The ground-breaking purchase of Motorola’s handset business by Google is a good example of this.”

Technology hotspots for the technology sector include cyber security, big data and smartphones, the latter of which is underpinned by the development of applications and components.

Another strand to the smart phone M&A story is provided by the specialist chip manufacturers, which provide the components necessary to run the growing array of applications in mobile devices.

Paul Mankin, partner in Corporate Finance at PwC in the North East, said: “Whilst in terms of overall size, the UK is a relatively minor player in the global technology market; it is home to a large number of high quality chip design companies, including Wolfson, ARM, CSR and Imagination Technologies.

“We believe that these and other world-class UK technology assets could prove to be attractive acquisition targets in the near future.”

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