Foreign and PE Buyers Boost Surprisingly High Deal Count in UK Tech M&A, Reveals ICON Corporate Finance

Trade Finance
18.01.2023 09:25 am

Surprisingly, the number of UK tech M&A deals in 2022 was the second highest on record, according to research from tech-focused investment bank ICON Corporate Finance.

Despite the global pandemic, war in Ukraine, falling equities, the highest inflation in 40 years, supply chain gridlock and a jump in interest rates, 972 deals were announced.

While the number of deals was down -9% compared with 2021, impressively it was up 9% compared with 2019 (pre-COVID). Smaller and mid-cap deals proved particularly resilient.

In its newly published UK Tech M&A Snapshot 2022, ICON reveals:

Foreign and PE-backed acquirers were key in 2022, responsible for 43% and 31% of all acquisitions respectively
The busiest acquirer in 2022 was Access Group, followed by Babble and Clearcourse, as private equity-funded businesses continue their buy-and-build spending spree
In 2022, total deal valuations weakened as investors were more risk-averse. Nevertheless, seven of the top 10 deals were valued at greater than 5 x the revenues
The number of UK unicorn companies continued to increase in 2022 with the addition of 10 new UK tech businesses such as Payfit, Multiverse, Spectrum and Beamery. Their focus is dominated by Fintech and Artificial Intelligence.
The wave of de-listings continued in 2022 with the loss of 15 companies, including majors such as Micro Focus, Aveva and Ideagen. The IPO market is essentially closed - with an appetite close to a 10-year low.

Report author and Head of M&A at ICON, Brian Parker, said: “The world has had no shortage of twists and turns in the past few years with Brexit, COVID and an alarming jump in inflation.
“So, it may be unexpected for many to learn in our report that 2022 was the second-best year ever for the number of UK Tech M&A deals.
“With strong ongoing demand for digital transformation and AI, a weak currency and plenty of PE cash, we remain positive about UK Tech M&A. ICON starts the year with a busy M&A pipeline and several deals in due diligence. But no doubt the year of the Rabbit will be full of surprises!”