The British technology sector speeds as its M&A values rocket
Mark Standish, corporate finance partner at Mazars, shared insight for investors and business owners into one of the hottest industry sectors. Despite its significant inherent risks, technology and telecoms based businesses are attracting interest from investors both at home and overseas, as the technological skills in the UK remain much sort after globally.
He said: “Our 2011 surveys suggested that economic risk was perceived as the main threat in these sectors, however keeping pace with technological change is deemed the largest risk to TMT (technology, media and telecoms) businesses. When you look at headline deals, you might speculate that recent acquisitions are reducing this risk by enabling companies to leapfrog timelines.”
Mark cited global deals such as Microsoft’s Skype buyout and Google’s acquisition of Motorola Mobility for billions of pounds. Headline deals in the UK include HP’s acquisition of Autonomy and Nvidia Corp buying Icera. More recently, Mazars helped to sell Workplace Systems for £41 million to a management team backed by LDC.
“High-tech businesses have become wary of developing products in-house. Adobe Systems illustrated why when it halted its development of its new Flash player plug-in for mobile devices because it had been overtaken by superior HTML5 software. In these spheres, accessing the capital to leapfrog via acquisitions and product investments has become vital and sometimes forces new business models. Amazon’s Kindle tablet is a strong example. As a result the M&A value of the technology sector rocketed in 2011.
"In 2011, around 80% of UK companies were bought by British organisations. However, half of the overseas buyers for remaining UK listed companies were from the US which is almost double the proportion of investors from this region compared to the year before. London is now known to be one of the world’s hotbeds of innovation. The view from a recent seminar, held by Mazars and SNR Denton, was that investors will continue to support UK-based, proven creative talent. “These industries launch fresh creations that transcend everything that has gone before. Alongside technical knowhow, language also helps to secure the UK’s position as a major source of valuable innovation,” concluded Mark.
Posted by: Mazars LLP
