Carlsquare survey: Economic pick-up leads to increasing M&A transactions in the German IT industry to an all-time record

The rapid economic pick-up after the financial crisis combined with a positive market sentiment throughout the economy has significantly driven the M&A activities in the German IT-industry.

With last year’s record breaking number of transactions the expected reversal within the IT industry was successfully achieved. In 2010 a total 500 acquisitions and investments to German IT advisories, software-, hardware- and internet businesses were completed. Compared to 2009 this is an increase of transactions of 27%.

Considering the overall German M&A market in 2010 with a total of 2,108 announced transactions the IT industry has gained intersectional in M&A importance. Against a 22.6% of all transactions stated a direct link to the IT industry in 2009 nearly every fourth transaction in 2010 is assigned to this industry with a total 23.7%.

Takeovers from and investments into German IT companies are also realized by German companies in 75% of all cases. The most important foreign acquirers for German IT companies are from Switzerland and the USA (total 40% of all international acquirers) as well as from other European countries. In particular Great Britain (13%) and France (12%) show increasing interests in German companies whereas this is due to increasing activities in transborder VC-financing where numerous young companies with international potential have completed larger financing rounds.

Main driver for the IT M&A business have been transactions in the internet sector (54%) where German and international publishers actively acquire several companies and also focusing more towards e-Commerce businesses followed by transactions in the software sector (27%).

After all the German IT companies with their technical expertise, customer relation and highly qualified employees will also be of special interest to international companies in 2011. According to Carlsquare experts, this year’s transactions will have a real strategic added value due to the fact that foreign investors seek to invest in the attractive German market.

Moreover the Hamburg based advisory company expects, due to noticeable consolidation processes in the IT industry (IT advisory), an increasing activity of national and international Private Equity companies which in line of buy-and-build concepts try to strengthen their portfolio with accompanying acquisitions.

If you are interested in the complete survey please contact us (info@carlsquare.com).