Increase in Tech Acquisitions Boosts Opportunities for Ireland’s IT Sector

09 June 2014

Significant opportunities exist for Ireland’s 700 indigenous companies to become tech titans of the future.

Tech founders heard how they can take their business to the next level at “Selling your tech company: insights, earnouts and outcomes”,  where tech entrepreneurs Mark Little, CEO of Storyful; Ray Nolan, founder of Hostelworld, and David Coghlan, Havok, gave their insights into selling a tech business.

Our event focused on how the indigenous tech sector can benefit from the current strong M&A market in order to grow and develop their companies on a global scale. Martin KelleherCorporate Partner, said that the increasing level of mergers and acquisitions (M&A) in the global technology market offers significant opportunities for Ireland’s indigenous IT sector.

Kelleher, who has advised on some of Ireland’s most successful technology deals, including the recent sales of Storyful to News Corp. and AMT-Sybex to Capita Plc., said tech giants are currently in acquisition mode, offering tech founders the prospect of growing their companies further through a strategic sale.

Attendees heard a range of key experiences and advice from the speakers present. These included:

  • Being exit ready from day one. Even before forming the company, know how you want to leave;
  • Beware of legal time bombs: think of best and worst case situations early on in sale process;
  • An exit is not always the end – it can be the entrance to new opportunities;
  • Most firms are bought, not sold as the purchaser normally comes knocking;
  • Consider your universe of purchasers and seek to build business relationships as they can be a route to exit;
  • Due diligence for funding is minor compared to purchase, so be deal ready from day one;
  • Create distance with the acquiring company and avoid emotional involvement.

Presently, the tech sector in Ireland generates €72 billion in export revenue to the Irish economy and employs over 100,000. Of that figure, €1.8 billion is produced by over 700 indigenous companies, employing 10,000 people.

David Coghlan, Martin Kelleher, Ray Nolan, Mark Little Storyful

Kelleher pointed to the benefits from increased M&A activity, including an ability for entrepreneurs to successfully exit a business, secure extra capital to accelerate growth within a larger organisation, as well as the wider economic gains through job creation.

Kelleher said the large cash reserves held by multinationals, coupled with uninvested capital held by private equity funds has resulted in an increase in M&A activity in 2014.

He said: ‘Established tech giants show no sign of slowing down their rate of acquisitions. In the space of nine years, Facebook has spent tens of billions acquiring over 40 new and established tech companies.

‘Microsoft has acquired over 200 tech companies since 1987 across all manner of software and hardware fields, including online advertising, telecommunications and 3D vision.

‘Google recently indicated that it has $50 billion to spend on overseas acquisitions over the coming period. This presents a huge opportunity for indigenous tech companies to grow and develop their companies further with the backing of well-established, experienced international tech partners.

‘Mason Hayes & Curran’s focus is on giving information and guidance to Irish companies who are looking at the future development of their businesses. We aim to provide them with the opportunity to explore their options, and today’s event enables people to hear directly from their peers who have been through successful exits,’ Kelleher concluded.

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