We dug into our data to see whether this was also the case in Europe, or whether Europe is managing to stay strong on an M&A level, as after all, the first half of 2015 saw a higher value of disclosed exits than the whole of 2014.
Although it’s a very good indicator, it is a little tricky to judge the strength of the scene per quarter based purely on the value of the exits, as it all depends on how many have been disclosed. Therefore it makes sense to have a look at the number of exits that took place as well.
This indicates the same thing: Q3 wasn’t as strong as Q2 but it was still up compared to Q1, which means that although the exit market slowed in Q3, it was still a strong quarter.
And at this stage it is too early to conclude whether Q2 was just an exceptional quarter or whether Q3 is the start of a decline in the European exit scene. Europe is certainly still faring better than the global trend, with CB Insights reporting an 18% decrease from Q2 to Q3 in number of exits, whereas Europe ‘only’ experienced an 11% decrease. Although it should also be pointed out that CB Insights only caught two European IPOs compared to the four we tracked for the quarter.
Next up, a breakdown by type of the 144 exits that we tracked in Q3:
And how did these break down compared to other recent quarters?
The top 10 deals accounted for 87.7% of the total disclosed exits in the quarter, mainly due to the huge telecom merger that occurred between The Netherlands Vimpelcom’s WIND Telecommunicazioni and Hutchison which was valued at €21.8 billion, and is the biggest exit we’ve tracked since we began these analyses in Q1 2014, and actually accounted for 55% of the total amount of disclosed exits this quarter.
There were only three Telecom deals in the top 10, which is fewer than usual, but it was still the more ‘traditional’ companies being bought that made up the biggest exits, such as PrimaCom (a cable company) and Innovation Group (an insurance-tech company). Other notable deals from Q3 include Adidas Group acquiring Austrian Runtastic, Yahoo buying Germany’s Media Group One (confirmed in Q3, ‘done’ in Q1), Facebook picking up Israel’s Pebbles, Microsoft purchasing Israeli company Adallom and Snapchat snapping up Looksery in the Ukraine.
With nearly 66% of deals undisclosed in Q3, compared to nearly 63% in Q2, this can also explain a little part of the shortfall between the two quarters, again pointing to the fact that although Q3 slowed down compared to Q2, it didn’t disastrously so.
The top three of UK, Germany and Israel is standard (although the UK and Germany have swapped positions from Q2), but Sweden in fourth is certainly worth pointing out. Sweden have been attracting serious amounts of venture capital over the last 18 months, but have not traditionally delivered too many exits, however, we could be witnessing the start of Sweden not only being a force to be reckoned with in terms of raising capital, but also in delivering returns. France are usually placed fourth in terms of exits, however in Q3 not only did they see fewer exits than Sweden, but also than The Netherlands and Belgium.
Interestingly, the UK matched the US as the main buyers of European tech companies in Q3, where normally, the US are the most comfortable buyers in terms of quantity. We also see Sweden quite high up in this chart, although it should be pointed out that most of these were Swedish companies buying domestically.
Although the United States bought less European companies this quarter than we’re accustomed to, Q3 still saw Facebook, Snapchat, Yahoo and Microsoft all shop European.
In conclusion, the key findings from our analysis of European tech exits in Q3 are:
- Another strong quarter for European exits, even considering the decrease compared to Q2 in terms of number of exits and total value.
- The Netherlands Vimpelcom’s WIND Telecommunicazioni merger with Hutchison accounted for 55% of the total value and without it, we could be talking about a disastrous downturn for European exits.
- Sweden are seeing an increase in both companies being acquired, and acquiring companies themselves, this is most likely due to the increased capital Swedish companies have been raising over the last 18 months or so.
- The percentage of acquiring companies from the US continues to drop just as it did in Q2.
- The biggest tech companies in the world are still buying European: firms like Facebook, Snapchat, Yahoo and Microsoft all did so in Q3.
- European tech exits now total more than €125 billion for the year, which is a 56% increase on 2014’s total exits, with one quarter still to go.
To place these findings into further context then check out our Q1 2015 exit analysis, our Q2 2015 exit analysis and our comprehensive report on the exit scene for the whole of 2014, which you can purchase here.
Featured image credit: Shutterstock/ Peter Gudella