Technology sector M&A in Q1 2016
After a record year globally for M&A in 2015, 16% higher than 2007’s previous peak, there has been a cooling down period at the start of 2016. Global M&A is re-balancing towards a sustainable level with Q1 2016 amounting to US$ 597.4bn, according to MergerMarket’s Global and regional M&A report. Following a record 2015 for UK inbound activity by deal count, 121 deals worth US$ 33bn were announced in Q1 2016 representing a 38.5% drop by value compared to Q1 2015 (162 deals, US$ 53.6bn).
Kingston Smith has analysed 66 deals recorded on our Technology deal tracker in Q1 2016. Here are some of our highlights of the quarter:
Fintech continues to be a key tech sector for the UK. Equity crowdfunding platform InvestingZone merged with corporate finance adviser Accerleris Capital in what is described the first deal of its kind as crowdfunding platforms look to mature into more traditional corporate finance markets.
With London widely acknowledged as the Fintech capital of the world, highly rated Durham based Atom Bank developed their platform with the acquisition of design and development house Grasp demonstrating that the rest of the UK are attempting to follow London’s lead. Atom are an online banking start-up and ranked first in Tech World’s Digital Challengers list 2016. It will be interesting to see if they can emulate the successes of US based Simple and Finland based Holvi, both digital banks recently acquired by Spanish bank BBVA.
Universities are a key breeding ground for Healthtech companies with London’s Imperial College, UCL and Kings College being three of the five leading health science centres in the UK. Further afield, Tucana, a start-up from University College Cork setup to investigate microbiome signatures to aid the diagnosis and treatment of diseases, was acquired by Leeds based 4D Pharma.
The evolution and digitisation of the marketing and media sectors continues at a rapid pace with over 50% of deals in the sector having a digital focus. The global marketing groups continue to be extremely acquisitive, particularly in the technology space as they look to develop analytical capabilities and digital platforms, WPP’s acquisition of System Analytics is a prime example of this.
Apps and Software
The combination of health and data continues to be a popular sector for apps. Yomp, the wellbeing platform for employees was acquired by integrated employee benefits hub Reward Gateway. A key feature of the platform is its gamification element which allows employees to form teams and compete in challenges to earn rewards.
Within the travel industry, UK based Trainline acquired France based online booking platform and mobile app Captain Train combining the number one independent digital rail ticketing retailers in both the UK and Continental Europe.
The Trainline Captain Train deal was one of many cross-border transactions involving UK companies with 42% of the deals analysed involving either an overseas buyer or seller. The infographic below shows the origin of buyers (left segments) and sellers (right segments) for cross-border transactions involving the UK:
Of the deals we analysed involving a cross-border transaction, 57% involved a UK buyer and 43% involved an overseas buyer with the USA providing 32% of these. The Rest of the World surprisingly only accounted for 4% of overseas acquirers. We expect this to increase in the future quarters as Indian and Chinese companies look to invest in the UK.
Authors: Nick Winters and Paul Winterflood