TMT in a post-COVID world - Kaine Smith
2020 was a year of adaptation and change for all markets across the world, with businesses looking to refine its products and services to meet the changing demands of an almost entirely virtual world.
2020 was a year of adaptation and change for all markets across the world, with businesses looking to refine its products and services to meet the changing demands of an almost entirely virtual world. As you can imagine, the impact on the tech sector was more profound than most.
The pandemic has presented a unique opportunity for innovation and growth for technology businesses in the face of huge adversity, driving the adoption of software and new working practices at a speed never seen previous. The impact of this acceleration in technology adoption is having a clear impact on M&A activity and valuations in the UK market.
Although the volume of UK transactions in the sector last year was down 35 per cent year-on-year from 2019, weighed down by initial disruption caused by COVID, both deal volume and valuations returned strongly in H2 2020 and are set to continue rising throughout 2021. Just how much of the technology adoption, changes in working practices and buying methods embed into our lives post-COVID is to be seen, but it will almost certainly influence whether the upward sector trends in multiples continue into the mid-term.
Interestingly the UK continued to spearhead the inward investment seen in the sector compared to its regional peers, with British technology companies having raised an incredible $14 billion dollars in 2020 alone, more than France and Germany combined.
The potential for the sector in 2021 is underlined by our strong pipeline of mandates in technology and SaaS in particular, which underlines the fantastic ability of Manchester to incubate such businesses. Manchester’s evolution into a genuine global leader in the sector has been remarkable in recent years, with now it officially being Europe’s fasting growing tech city. Its strength is exemplified by the successful initial public offering (IPO) of e-commerce giant The Hut Group. The largest IPO since 2015, it raised £1.88bn on its stock market debut, giving it a valuation close to £5.4bn and setting a record the UK’s largest ever technology IPO, a fantastic story made all the more remarkable by its timing in the midst of the COVID crisis.
Given the ever-stronger support private equity and venture capital is providing in the North West market, the ongoing desire for inward investment from overseas corporates and, perhaps most of all, the quality of businesses and software the region continues to incubate, we remain bullish on the sectors prospects into 2021 and beyond.
