UK tech acquisitions reach all-time high

The volume of European technology acquisitions has reached an all-time high, surpassing even the frenzied activity at the height of the dotcom peak, market analysts claimed today.

According to the latest findings from Regent Associates, European acquisitions of technology companies have finally struck back following a three-year downturn.

The sector surged last year to 2,405 deals, a substantial 69 per cent increase on 2003 and even beating the dotcom 'bubble year' of 2000.

The UK's was the most active European market, accounting for almost a third of all transactions in 2004, 225 more than in 2003.

Peter Rowell, chairman of Regent Associates, said: "2004 was a very active acquisition market for technology companies.

"However, unlike 2000, current activity is built on solid foundations with carefully thought out strategic and financial metrics. Buyers know what they are buying and sellers know why they are selling."

The analyst firm's latest European Technology Acquisition Review noted that 2004 saw the combined value of transactions rise strongly by 36 per cent to $134.22bn. Despite being somewhat short of the $764bn seen in 2000, it is up substantially from the $98.54bn of 2003.

One key difference highlighted by the report is the lack of "huge deals" between 2000 and 2004. 2000 saw 13 deals with values in excess of $10bn (one deal in 2004) and 56 deals between $1bn and $10bn (17 deals in 2004).

Rowell added: "There is plenty of cash around at present. The top 10 US technology companies currently have available cash in excess of $150bn, while the European venture capital industry is reportedly sitting on some €39bn.

"If the market will not deliver strong organic growth, then the rapidly improving cash positions of many leading suppliers will be used to fuel growth by acquisition."

Looking ahead, Regent Associates predicts that that 2005 will be "even more active" than the past year.

"Acquisitions are a fundamental part of this fast moving industry and all of the ingredients are in place for a busy year: a supportive economy, buyers that are seeking growth and plenty of cash," Rowell said.