When less is more: 21% of EU tech exits involved US companies in Q1 2016, the lowest rate in two years
From Tech.eu:
The involvement of US tech companies in the acquisition of European and Israeli startups has decreased over the past few quarters, measured as a percentage of all exit activity.
According to data gathered by Tech.eu, US companies were responsible for 21% of Europe and Israel’s 86 venture-backed exits in Q1 2016, the lowest percentage in two years.
In 2014, 42% of all venture-backed startups acquired in Europe and Israel were bought by American companies, versus 35% in 2015 and just 21% in Q1 2016.
The 17 acquisitions conducted by American companies in the first three months of 2016 combined for €1.3 billion, mostly thanks to large exits involving Ravello Systems (acquired by Oracle for €454 million), Leaba Semiconductor (acquired by Cisco for €345 million) and UK-based SwiftKey (bought by Microsoft for, reportedly, €227 million).
In Q1, three of the top 5 five exits in the region came from US companies.
> Purchase our ‘European Tech Exits Report for Q1 2016’ for just £99
Whilst the percentage of US-led acquisitions has decreased over time, these accounted for almost half of Europe and Israel’s total exit value in Q1 2016, at 43% of Europe’s €3.1 billion.
US involvement as a percentage of European tech exits value had been trending downwards since the third quarter of 2014.
The next few quarters will dictate whether the significant uplift seen in Q1 was anecdotal or if US-based companies are showing increasing interest in solid, mature and higher valued European tech startups rather than early-stage ventures.
To wit, large multinationals such as Amazon, Cisco, Facebook, IBM or Intel (all of which acquired at least one European or Israeli company in Q1 2016), can benefit from such transactions by using offshore profits, thus avoiding the payment of high taxes if they were to repatriate overseas capital.
According to a study from the ‘Citizens for Tax Justice and U.S. PIRG Education Fund’, at least 358 US companies collectively maintain 7,622 separate overseas subsidiaries holding $2.1 trillion in profits.
US companies have traditionally been the main acquirers of European tech startups, and this was once again the case in Q1 2016. We’ll keep an eye out for changes in the future.
But, in summary, US companies are still very much in the driver’s seat when it comes to acquisitions of Euro tech companies. Percentage-wise, things may seem be slowing down, but it’s a whole different story when you look at the value.
> Europe and Israel saw 86 venture-backed exits in Q1 2016, totalling €3.1 billion. For more detailed analysis, read our recently published European Tech Exits Report for Q1 2016.
Also read:
European tech funding was almost flat in Q1 2016 — if you don’t include Spotify’s massive debt round
