Published: September 3, 2020

A brisk recovery in Europe's tech M&A market has followed a relatively flattened COVID-19 curve. Although a rise in activity in recent months has seen Western Europe's share of dealmaking tick upward, that hasn't necessarily translated into a healthier market. Discounts prevail in European tech M&A, while North American targets have gotten more expensive.

At the onset of the pandemic, acquisitions of tech targets based in Western Europe dropped a bit less than they did around the rest of the globe. According to 451 Research's M&A KnowledgeBase, such purchases declined by 17% in the second quarter, compared with the previous quarter. Acquisitions of North American targets, which account for almost two-thirds of global tech transactions, plummeted 23%. European activity also bounced back higher.

As we noted earlier this week, the global tech M&A market surged in August to its highest monthly level in nearly two years. In Europe, the recovery was particularly pronounced – at least in terms of deal volume. Two-thirds of the way through the third quarter, Western Europe is on pace to sell more of its tech vendors than any quarter in the past five years.

In North America, a raging bull market and an affinity for targets that seem immune, or have benefited, from the effects of coronavirus have driven the rebound in tech M&A. But in Europe, buyers are shopping for what they've always bought – companies that can be had at a discount. Since the start of April, the median Western European tech target has fetched 1.7x trailing revenue, slightly down from 2x in the past two years. North American targets, however, have fetched 4x since the spring – reversing a gradual decline from a 2018 high.

Scott Denne
Senior Research Analyst

Scott Denne is a Senior Research Analyst with 451 Research, part of S&P Global Market Intelligence, where he covers technology M&A and private equity. His research explores changes in deal-making and shifts in valuation. His reports cover broad movements in the tech M&A markets, private-equity investments, analysis of specific deals and forecasts of deal activity in multiple sectors of the software industry.

Sheryl Kingstone
Research Director

Sheryl Kingstone leads 451 Research’s coverage for Customer Experience & Commerce, which covers the many aspects of how customer experience is a catalyst for digital transformation. She oversees the company’s coverage of a variety of customer experience software markets spanning ad tech, marketing, sales, commerce and service.

Keith Dawson
Principal Analyst

Keith Dawson is a principal analyst in 451 Research's Customer Experience & Commerce practice, primarily covering marketing technology. Keith has been covering the intersection of communications and enterprise software for 25 years, mainly looking at how to influence and optimize the customer experience.