UK steps up mergers and acquisition activity

Report shows that acquisition activity rampant as VARs predict hectic year ahead for the market

The UK is leading the way in IT mergers and acquisition (M&A) activity, according to the latest report from market watcher Regent Associates.

During the third quarter 2005, 820 acquisition transactions were announced, according to the analyst’s European Technology Acquisition Review, the previous highest record was 781 during Q1 2000.

UK and Irish companies accounted for 28 per cent of all purchases in the first nine months of the year.

Peter Rowell, chairman of Regent Associates, said: “There is a lot of consolidation going on in certain sectors of the industry, particularly in the reseller/distribution sector, and there is a lot more to come.

“Acquisition activity is healthy this time, rather than the crazy activity we saw in 1998/99. It is being carefully managed by buyers.”

Rowell said that any company considering a sale should forge ahead over the next 12 months. “It’s going to be a tough year for the channel with margins getting thinner, but there is no sign of any slowdown in M&A activity so now is an ideal time to sell,” he said.

Shaun Frohlich, executive chairman of VAR Teksys, said: “We have identified several opportunities and are actively pursuing a couple of them. The time is right, particularly in the reseller/system integrator space where there is a long way to go before the market is fully consolidated.”

Nigel Hudson, director of VAR Technology Services Group, said: “We’ve bought 15 businesses in the past two years and are building a network of IT service centres. We are still looking to acquire further and extend our footprint across the UK.”

sara_yirrell@vnu.co.uk