European M&A is Hot

From my viewpoint in Amsterdam, European software M&A is hitting record levels. Corum has announced three transactions so far this year and several more are in the works. What’s driving this when the economy on this side of the pond is supposedly bad? One simple explanation is that the adoption of new software and technology is not heavily driven by the economy.

At the enterprise level, if a product has a demonstrable ROI then buyers will take a look and often adopt. After all, one way to reduce expenses, beyond cutting staff, is through efficiency. Further, the big guys simply don’t have a corner on the innovation market. In fact, I would argue that much of the innovative new software is created by entrepreneurs who recognized a coming need and acted on it. What may have looked like a gamble or a very small niche to a Microsoft or a Google often becomes an important trend, and fits very well within a much larger company’s existing product offering. This is when an acquisition occurs.

And the US doesn’t hold control over start-ups either. Every week I meet with Europe-based companies that have great new ideas they have brought to market that are very promising. I often see companies with technology that when introduced several years back, was way ahead of its time but didn’t get early market traction -- only now to be intersecting market needs and taking off. While there’s no doubt that Silicon Valley has its strong support system for technology companies, the UK, France, Netherlands and the Nordics are just a few countries here in Europe that have impressive support infrastructures for emerging software companies.

Finally, while many US-based companies are acquiring European technology enterprises, I am starting to see more and more Europe-based companies crossing the pond to the States and buying US companies to add to their arsenals. I think we are going to see much more of this.

Over 60% of Corum’s deals are cross border so stay-tuned for more announcements from Corum on European transactions and to what I am predicting to be a record year for us here in Europe.

Posted by , Chairman on 16 May 2013
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