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Mergers and acquisitions to bounce back in 2010

A new report has claimed 2010 will see mergers and acquisitions in the tech sector rise again following the lowest values since the dot com bubble burst.

By Jennifer Scott, 26 Jan 2010 at 00:01

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There may have been some headline-making mergers and acquisitions across the Atlantic but 2009 saw a pretty quiet stretch for the UK technology industry.

However, a new report released today by PricewaterhouseCoopers has claimed the market is set to leap back to life in 2010 after its six-year low.

Completed deal volumes were down by over 66 per cent last year with values falling from €6.8 billion (£5.9 billion) in 2008 to €3.3 billion in just one year - the lowest since 2003.

But Andy Morgan, a partner at PricewaterhouseCoopers LLP, said that deal values have remained stable and the outlook for 2010 is good.

“Recovery in UK tech M&A appears less pronounced than in the US where mega-deal announcements have provided momentum,” he said in a statement.

“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.”

For the industry to be successful is this area, Morgan claims companies must be realistic on prices and buyers and sellers have to “embrace a new era of realism if deals are to be done.”

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Asset Value

The mergers and acquisitions market may be showing tentative signs of recovery, but poor asset management could be compromising corporate value and potentially jeopardising planned mergers and acquisitions. While many UK organisations appear highly confident of the value of their corporate assets, claiming 95% accuracy of the asset register, in reality at least 20% of assets no longer exist and another 40% are so poorly described that they can’t be matched to any physical asset. With such a lack of robust information how can any organisation undertake due diligence on behalf of shareholders? Without accurate records, potential acquirers will struggle to put a correct figure on asset value. Without access to a consolidated asset register that also records asset maintenance, it is extremely difficult to ascertain an asset’s longer term value to the business. Organisations cannot blithely accept the figures in the asset register as a true indicator of corporate value; a full asset audit is essential to ensure due diligence. Karen Conneely Group Commercial Manager Real Asset Management www.realassetmgt.co.uk

By Karen_Conneely on Tuesday Jan 26