Tech M&A activity sees continued decline

While some hoped for a rebound in European M&A deal value, the market data shows otherwise. According to Ansarada’s deal room data, Europe experienced a 20% year-on-year decline in new tech and telecom M&A transactions up to 30 September 2024. Additionally, there was a 15% drop from Q2 to Q3 2024, signaling continued challenges for the region​. Although central bank monetary policies in Europe are easing, this has not yet translated into a pick-up in M&A activity. 
 
Private equity (PE) activity has not bounced back significantly either, despite high expectations for recovery. The region remains constrained by broader economic and geopolitical challenges, which are delaying the revival of deal activity. European nations, particularly France and Germany, are actively seeking to enhance their private capital sectors. France is concentrating on policy measures aimed at fostering a robust technology ecosystem.

However, venture capital (VC) deals and investments in artificial intelligence (AI) have gained some traction. AI and machine learning (ML) saw a notable €6.3 billion investment in H1 2024, with the UK leading these investments, followed by France. Despite these areas of optimism, overall M&A deal value remains under pressure as the region navigates through uncertainties

From January to May 2024, the UK's private capital deal value reached €50.9 billion, exceeding the combined total of €48.7 billion for France and Germany. Despite a forecast in December 2023 for a reversal of this trend, the UK has maintained its lead in 2024. A significant portion of the UK's figure is attributed to private equity deals, such as the €5.0 billion take-private of Darktrace, which has inflated the overall total.
 
Through May 2024, deal value has generally remained lower or flat compared to 2023 figures across all regions. France is showing the largest potential year-over-year declines. The gap between the UK's and the combined total of France and Germany stands at €2.3 billion.
 
In European tech M&A, one of the biggest transactions of the year has been Swisscom’s acquisition of Vodafone Italia for €8 billion. The acquisition aims to merge Vodafone Italia with Fastweb, Swisscom's subsidiary in Italy, combining their complementary high-quality mobile and fixed infrastructures, competencies and capabilities. 
 
This move is intended to create a leading converged challenger in a market with significant growth opportunities. The transaction is subject to regulatory and other approvals and is expected to close in the first quarter of 2025.
 
Another standout deal this year in European M&A has been the $2.7 billion July sale of Exclusive Networks to a consortium involving CD&R and Everest UK HoldCo Limited, which are controlled by the Permira funds. Exclusive Networks is a leading cybersecurity solutions company. This move is intended to support Exclusive Networks' growth and development, with the company's founder, Olivier Breittmayer, remaining a shareholder.
 
Also in July, Francisco Partners and TA Associates, prominent global investment firms, signed a $2 billion agreement to become co-controlling shareholders of Orisha, a leading European vertical software company headquartered in France. TA, which has been Orisha's majority shareholder since 2021, will reinvest in the company alongside Francisco Partners and Orisha's management. This investment aims to support Orisha's continued growth, strengthen its industry leadership through organic growth, diversification, geographic expansion and strategic acquisitions.
 
In Europe, cleantech is on track for a record year, driven by large deals in renewables. It’s expected there will be further activity in cleantech M&A heading into the back end of 2024 due to monetary policy easing and subsequent lower costs. This could support competition among PE firms and corporate acquirers for these assets looking ahead.
 
Looking ahead, despite a few IPOs indicating a potential recovery, the IPO market remains cautious, with no clear signs of a strong recovery in the near term. Companies are waiting for more favorable conditions before entering the market​