The quote that was used in the title of this article, lifted from Czech-born British playwright Tom Stoppard’s tragicomedy Rosencrantz and Guildenstern Are Dead, is difficult to misinterpret: a supposed end tends to be the beginning of something new.
The same goes for exits in business parlance, i.e. when a company gets acquired, merges with another entity or goes public. More often than not, the product or service offered by the ‘exited’ company will live on in some shape or form, if only in the hearts and minds of those who built it.
All this as an introduction to tech.eu’s second report on M&A activity in the European tech industry, which takes a deep dive into the available data for Q2 2014. Everything you’ve always wanted to know about EU tech exits in the first quarter of the year can be found here, by the way.
We counted 92 EU tech exits in Q2 2014, of which 10 were IPOs
According to our research, there were 92 exits of European tech companies in the second quarter of this year, up from 54 deals tracked in Q1 2014 – an increase of about 70 percent.
The number of acquisitions rose to 81 (up from 50 in Q1 2014), while we counted 10 IPOs – albeit most of them small listings on local exchanges – compared to just one in the previous quarter.
The biggest IPOs were those of UK companies Just-Eat, Markit and Zoopla, while Zendesk (arguably no longer strictly a European company, but founded in Denmark) had a stellar initial public offering of its shares on NASDAQ last May. Smaller listings included Audioboo (UK) and AwoX (France).
There was a sole merger in Q2 2014 (compared to three in Q1), namely 7digital + UBC Media.
We’ll dive a bit deeper into deal sizes below, but for now, the main takeaway from this report is that the number of deals has increased significantly quarter-to-quarter.
Non-disclosure in almost 75% of deals
Out of 92 known deals in Q2 2014, we can only determine the size of 26 deals (or in 28 percent of the cases). The rest remains undisclosed – at least for now.
Exit size matters
Looking at the size of the transactions of which the price was disclosed or at least reported by a reputable and credible source, a number of interesting observations can be made.
In the ‘top 10’ of deals based on transaction size or IPO valuation, there were a total of 7 initial public offerings (Just-Eat, Markit, Zendesk, Zoopla, eDreams Odigeo, Game Digital and Clavister) but the most notable one was #2, the monster acquisition of Oldford Group (The Rational Group).
That name may not ring a bell instantly, but Oldford Group is the Isle Of Man-registered holding that owns online poker brands PokerStars and Full Tilt Poker. Last month, Canadian gambling company Amaya Gaming Group acquired Oldford Group in a deal valued at $4.9 billion (3.6 billion euros).
In an even bigger deal, European cable group Altice/Numericable bought France’s second-biggest telecom operator SFR in a deal worth 17 billion euro back in April – up to you whether this should be considered a tech exit per se but worth noting either way. A third giga-deal also came out of France, with IT services firm Atos acquiring rival Bull for about 620 million euros.
Five other M&A agreements involved transactions worth more than 100 million euros:
– M and M Direct (UK): acquired by BESTSELLER for 177 million euros
– Yad2 (Israel): acquired by Axel Springer for 165 million euros
– Sociomantic Labs (Germany): acquired by Dunnhumby / Tesco for ‘hundreds of millions of dollars’
– Jobsite (UK): acquired by StepStone for approximately 110 million euros
– LaFourchette (France): acquired by TripAdvisor for about 100 million euros
It’s perhaps important to note that there were a number of acquisitions that likely would have been very high up the list of biggest deals, were the size disclosed.
These include Canon’s acquisition of Denmark-based Milestone Systems, Zayo’s acquisition of Neo Telecoms, Boeing’s buy-out of ETS Aviation, Scout24’s acquisition of Austria’s Immobilien.net, Expedia’s purchase of Auto Escape Group and Permira’s acquisition of TeamViewer.
According to our research, Facebook and TripAdvisor were the most active acquirers, albeit only picking up two EU tech companies both in the second quarter of 2014:
The rest of the acquirers did only one deal in Europe in Q2 2014, but quite a few were closed by notable tech companies such as Telefonica (EyeOS), Red Hat (eNovance), Cisco (Assemblage), Intel (Ginger Software), Autodesk (Bitsquid), Gartner (Senexx), Fairchild Semiconductor (Xsens), Priceline (Hotel Ninjas), Vasco (Risk IDS), Monitise (Markco Media), SolarWinds (Pingdom), Criteo (AdQuantic), INSIDE Secure (Metaforic) and Software AG (metaquark).
In which countries in Europe did these 92 transactions take place?
Mostly in the United Kingdom this quarter, with 20 out of 92 deals (approx. 22%) involving a company based in the UK. Germany wasn’t far off with 18 deals, followed by France with 16 deals.
In Spain, 7 tech companies were acquired while eDreams Odigeo went public (8 deals in total). In Israel, 6 startups were acquired, 5 in Sweden and 4 in both Denmark and The Netherlands.
There were also exits to be counted in Russia, Finland, Belgium, Austria and Portugal.
And where did the buyers of EU tech companies hail from during last quarter?
Overwhelmingly from the United States (which was also the case in Q1 2014), with 30 deals involving an American company as the acquirer – or in almost 37% of the cases.
Active buyers were also to be found in Germany (13 deals), France (11 deals) and the UK (8 deals). This is similar to the data we gathered for the first quarter of the year.
Companies based in countries like Switzerland, Canada and Brazil made a single acquisition of a European tech company each.
To conclude our report, we take another look at when the deals were announced, if only to get some sense of the most M&A-heavy months and quarters over time.
As you can tell from the graph below, there was an average of 27 deals announced in April and May, but June was a far more active month, with 38 deals announced during that month.
Particularly busy days were 3 April (1 IPO, 4 acquisitions) and 18 June (2 IPOs, 7 acquisitions).
We’ll continue to publish this type of report in the future; keep an eye out.
If we’ve omitted something or you spot anything erroneous above, let us know here and we’ll fix if warranted. If you enjoyed this report, subscribe to our weekly newsletter, on Twitter and on Facebook for regular updates.
(Featured image credit: FTXbg / Shutterstock – all graphs copyright of tech.eu)