Y2K bug eats into VC deals

UK venture-capital firms are delaying business deals for fear of the Y2K bug, according to a BDO Stoy Hayward report. Venture-capital houses are postponing acquisitions and sales until next year due to concerns that companies are not ready for the millennium threat. Around 34 per cent of the 96 venture-capital firms questioned by accountancy firm BDO Stoy Hayward forecast fewer deals in the last three months of this year – and all because of the bug. Peter Hemington, head of mergers and acquisitions at BDO Stoy Hayward, said: "Owners of companies wishing to sell or seeking finance could find it difficult to get their deal away in the last quarter." He advised companies to act quickly to get a sale in late summer or early autumn to give buyers time to iron out possible glitches. Companies most likely to be affected by the bug were financial services, IT and distribution businesses, said Hemington. "A couple of houses have said off-the-record their investment committees are demanding good reasons not to delay acquisitions in affected sectors in the last quarter until after January," he added. The findings follow last week’s statement by Taskforce 2000, the government watchdog, that 300 of the UK’s biggest companies had not started to prepare for the bug. ®