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Domestic deal-making on the rise

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The UK went against tradition last year and became a net investor in technology companies, according to a new report.

Year-end figures for technology mergers and acquisitions from PricewaterhouseCoopers (PwC) Corporate Finance show that UK companies acquired 33 technology businesses worldwide in 2005, while just 24 UK companies were procured by overseas buyers.

In 2004, 32 UK technology firms were purchased by international buyers, compared to 25 domestic acquisitions.

Overall, PwC said the figures show a trend toward increasing domestic deal activity, with UK deal volumes up 58 per cent.

What's more, the numbers showed the UK Alternative Investment Market (AIM) posing a strong challenge to the US NASDAQ as the market of choice for young, fast-growth technology firms, the report said.

The junior stock market's straightforward regulatory framework, high liquidity and growing international visibility is proving to be a "fruitful hunting ground" for buyers looking to acquire companies in the middle of their growth curve.

"Strategic M&A was firmly back on the boardroom agenda in 2005, and this has had a profoundly positive effect on the technology deal market as a whole," PwC Corporate Finance technology sector leader Andy Morgan said.

"The large deals last year helped create the confidence that encouraged M&A in the mid-market where most technology companies are to be found. Looking ahead to 2006, we believe this activity will continue, with the mid-market remaining the heartland for M&A in Europe, in particular."

Copyright © 2006, Startups.co.uk

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