Channel M&A ball keeps rolling
Deal flow remains high in Q3, data from Regent indicates
The pace of merger and acquisition (M&A) activity in the European channel and wider IT industry remains fevered, third-quarter data from Regent Associates reveals.
According to the merger adviser, 763 deals involving European technology, communications and media firms were completed in Q3.
This is roughly flat on Q1 and Q2, when 745 and 776 deals were completed, but up sharply on the 574 and 625 acquisitions inked in the same quarters in 2009 and 2010 respectively.
The UK logged 243 deals, the highest quarterly total for several years and up by more than a half year on year.
The total value of deals done also remained high at $50.1bn (£32bn). Some 44 were worth more than $100m, compared with 35 in Q3 of 2010 and 14 in Q3 of 2009. HP-Autonomy was the only deal worth over $10bn.
Some 49 of the deals inked in EMEA in Q3 involved IT resellers and distributors, flat on Q2 but up on the 30 and 44 deals completed in the same quarters in 2009 and 2010, Regents data showed. Noteworthy deals in the quarter include Tech Data's acquisition of Man and Machine's UK distribution business, management buy-outs at Zycko and Intrinsic, SCC's acquisition of French reseller LNA and a change of ownership at components distributor Anglia Components.
Talking to ChannelWeb, Regent research director David Scurr said IT industry M&A activity had stabilised at a relatively high level following a slump in 2008 and 2009.
"There has been a bigger deal flow this year," he confirmed.
Scurr said activity levels had been boosted by an increase in cash-rich companies and more realism about valuations on both sides of the negotiating table. Average valuations stood at 16.1 times earnings in Q3, compared with a low of 10.3 in Q2 2009.
Some 133 acquisitions involved North American firms buying in Europe, up from the usual quarterly total of about 80 to 90.
"There has been a notable increase in North American companies coming back to Europe as buyers," Scurr said.
Of the 763 deals completed in Q3, 176 were of firms in the IT services sector and 124 involved software companies. IT distributors and resellers accounted for 49 deals, computer hardware players 24, comms services players 43 and comms equipment outfits 20. The remainder were deals involving companies in the content and media, applied technology and internet services sectors.