European tech deals inked this year are more than last five years combined, says Magister Advisors

Victor Basta, partner at Magister Advisors

The European technology industry has come of age in 2016, according to analysis by technology merger and acquisition (M&A) advisory firm Magister Advisors.

The firm believes that tightening US immigration will consolidate world-class European talent pool. Magister reported unprecedented M&A interest from Asian buyers, together with a strong IPO (initial public offering) market for the best European tech businesses, which it says have driven an unprecedented surge in “blockbuster” deals.

Magister Advisors also sees the next wave of $5 billion+ companies already emerging in Europe, underpinned by comparatively strong growth and revenue performance by European unicorns and a climate of innovation in some of the hottest technology sectors. 

The six large deals so far this year are NXP’s $45 billion sale to Qualcomm, Softbank’s $35 billion purchase of the UK’s ARM plc, Tencent’s $9 billion acquisition of Nordic gaming company Supercell, Activision’s $6 billion purchase of Candy Crush parent King, and the successful IPOs of Markit and Worldpay. Just behind these is Danish payment company Nets’ $5 billion IPO a few weeks ago. 

Magister Advisors’ analysis has shown that the only other European tech companies achieving these valuations since 2010 have been Skype (2011), Autonomy which was famously sold to HP in 2011, Microsoft’s disastrous 2013 purchase of Nokia’s handset business, and Zalando listed in 2014.

XhnSn3S0Magister Advisors notes that not only has the quantity of what it terms “blockbuster deals” increased in 2016, the quality has also improved dramatically. Whereas Microsoft’s Nokia mobile purchase, for example, was a distress sale, the acquisitions of ARM, King and NXP are purchases of leadership companies in their field, with huge future strategic potential for their acquirers, says Magister. 

Three market sectors in the ascendancy in Europe, according to Magister Advisors’ analysis, are Payments, Analytics software and AI. Three market sectors in decline are e-commerce, Personal productivity software and Ad Tech.

Victor Basta, partner at Magister Advisors, said: “2016 has been an unprecedented year for European tech. We have seen a Nordic company founded barely six years ago, Supercell, attract $9 billion of cash from one of Asia’s internet giants. And one of the pillars of the mobile revolution, ARM has gone from IPO to a $35 billion acquisition by Softbank in under 20 years. The exponential growth in value associated with Silicon Valley is no longer confined to Pacific Time Zone. Entrepreneurs in Europe now have home-grown models of how to create, build, and scale companies of huge value without ever leaving the European continent. 2016 will be looked on as the year the European tech industry truly came of age, poignantly in a year when the whole European experiment has been called into question.” 

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