UK tech firms set for M&A bounce-back

Market has "awoken from deep sleep" following six-year low in activity, according to PricewaterhouseCoopers

Shake on it: deal volumes dropped significantly last year

The UK technology market is ripe for a flurry of merger and acquisition (M &A) activity in 2010, following a six-year low in deals last year.

According to PricewaterhouseCoopers LLP (PwC), the number of completed deals in the sector fell from 66 to 23 in 2009 – the lowest number since 2003. Deal volumes fell from €6.8m (£5.9bn) to €3.3bn (£2.9bn).

Just seven deals were backed by private equity, compared with 19 in 2008.

IT services giant Capita Group completed two of the 10 biggest deals, buying networking and managed services specialist Synetrix for €84m and Cisco Gold partner Carillion for €41m. Distributor Avnet’s €140m purchase of Abacus was the third-largest deal.

However, according to PwC, the UK tech M&A market has now “awoken” following a period of “deep sleep”.

Andy Morgan, partner, PwC, said: “Recovery in UK tech M&A appears less pronounced than in the US where mega-deal announcements have provided momentum.

“However, the right conditions appear to be in place to mean a tipping point into the next stage of the deal cycle and local confidence is starting to return.”