The value of European technology mergers and acquisitions in 2007 hit $349 billion, a 4% rise over 2006, according to M&A investment adviser Regent Associates.
A study of acquisition activity among European technology companies found that the total number of transactions in 2007 was 3,215, down 2% from 2006. These figures reflect good health in the industry despite predictions of unfavourable economic conditions in the coming year, says Peter Rowell, Regent Associates’ chairman.
“Acquisition activity in the technology sector held up remarkably well over the course of 2007,” he explains. “Overall, the technology industry is doing quite well, with good company performances producing solid profits and plenty of cash.”
A recent spate of large acquisitions, including IBM’s purchase of Cognos and SAP’s Business Objects buy, has led some market watchers to predict a period of intensified consolidation in the global technology market. However, IT industry analyst Forrester Research, predict that consolidation will in fact slow in 2008.
“The conventional wisdom is wrong,” says Forrester lead analyst Ray Wang. “In a global software market that is growing at double-digit rates, vendors don’t need to go through the headaches that come with super-sized acquisitions to support growth and satisfy investors.”
However, other analysts suggest that the industry growth level of 10% to 12% over 2007 would have been several percentage points lower if not for the inflating influence of acquisition activity.