UK tech market is positive M&A exception

Mergers and Acquisitions (M&A) in the UK have found most forward Price-to-Earnings (P/E) ratios down 14 percent or higher in the last 12 months – except for the technology industry.

The tech industry in the UK has found itself down on P/E ratios but only by three percent.

According to a report from KPMG, the Global M&A Predictor, the highest trend for M&As is in the telecoms segment – where P/E ratios are up by two percent. The increase in markets, nine percent, has outstripped expected earnings at eight percent. This area sitting somewhere on the technology landscape is the only sector in the UK where the price-to-earnings are positive, but non-cyclical consumer goods are just behind, says KPMG, at zero percent. 

The report suggests that the capacity for deals is high on the mark in non-cyclical consumer goods, because the net debt to the EBITDA ratio – standing for earnings before interest, tax, deprecation and amortisation – is down 127 percent but up 27 percent in tech. 

Continually improving technological advancements mean that, says tech partner Jonathan Stankler at KPMG, the tech industry is an exception. “Be it web-enabled television replacing digital in homes, music and sporting events bypassing traditional media companies to go direct to market, technology companies in the mobile data space and the cloud are well positioned to deliver strong growth.

“In addition, a myriad of technological advancements are providing stimuli to the deal market as companies seek to share IP and access technology hungry environments.”