Record volume of UK M&A tech deals in first quarter, with deals across the region

ICON Corporate Finance

A new report from technology-focused investment bank ICON Corporate Finance, has revealed record-breaking tech deal activity in the first quarter of 2021, up 28% on Q1 2020, with 268 deals announced. Evidencing resilience within the sector and a huge appetite for Tech organisations, ICON believes M&A activity is yet to see its peak, and could easily surpass the UK total of 711 tech M&A deals completed last year.

Digital transformation, fast-tracked by lockdowns across the world, has created a plethora of new digital solution providers that are grabbing the attention of overseas PE backed acquirers. Among these, UK Tech providers are proving flavour of the month as PE houses look to buy, build and eventually sell. Corporate acquirers too are playing their part in an effort to gain an edge over rivals or to provide new revenue streams. The result has been valuations rising to near record levels.

ICON believes that Digital Transformation across all industry sectors will continue to accelerate, boosted in no small part by appetite from overseas investors. Last year a record-breaking 48% of all UK deals involved cross-border backing, a figure which could yet be surpassed in 2021.

Standard Life Aberdeen sold Bristol-based Parmenion to PE house Preservation Capital Partners for £102 million, double the amount that
they paid when it was acquired five years ago and about 5x revenues. Parmenion has grown to £8 billion of assets since it was founded in 2007. It provides discretionary managed model portfolios as well as a platform service to advisers.

Naviga Inc acquired Bracknell-based Miles 33, a leading supplier of digital publishing solutions for the media industry, with a focus on editorial and advertising management solutions. It was established in 1973.

Totalmobile acquired CognitoiQ, a Newbury-based provider of workforce management and analytics technology. Cognito iQ collects data from multiple sources to provide a clear overview of operational performance. Clients include Hermes, TfL and Argos.

Onecom completed two major deals in less than a month with the takeover of both High Wycombe-based Olive Communications and then Gloucesershire-based 9 Group. Onecom claims the deals will make it the biggest B2B mobile, fixed-line and cloud specialist in the UK, providing services to more than 0.5m corporate and business end-users this year. The acquisition follows a £100m investment in Onecom from mid-market private equity firm LDC in 2019 to fuel growth and will take reseller revenues beyond £150m. Darren Ridge, founder of Onecom Group, said: “The inevitable changes to working patterns across the UK and globally as a result of the pandemic have accelerated the need for integrated cloud communications and significantly increased demand for transformation and digitalisation”.

Newbury-based Gamma Communications acquired Mission Labs, for initial consideration of £40 million. Mission Labs is a unified communications- as-a-service (UCaaS) technology business aimed at the cloud contact centre (CCaaS) market. Its product – CircleLoop – provides a cloud-based telephony product. Having worked together for 18 months Gamma clearly see opportunity to grow the revenues significantly.