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2016 a blockbuster year for European tech, Magister Advisors

In a year when Brexit called the whole European experiment into question, the continent’s technology industry has come of age, according to tech M&A advisory firm Magister Advisors. Unprecedented M&A interest from Asian buyers, together with a strong IPO market, drove a surge in “blockbuster” deals, including the IPOs of Markit, Worldpay and Nets. There have been six $5 billion+ deals already this year with a total consideration approaching $100 billion versus five in the last five years combined.

Three market sectors in the ascendancy are payments, analytics software and AI. Victor Basta, partner at Magister Advisors, says: “2016 has been an unprecedented year for European tech. Entrepreneurs in Europe now have home-grown models of how to create, build, and scale companies of huge value without ever leaving the European continent. The 2016 blockbuster deals are about buying long term market leaders, not buying cheap – and encouragingly there is a strong pipeline. Clearly Spotify, Adyen, Transferwise and a group of other European leaders are developing quickly and will form the next wave of blockbuster deals.”

European tech is developing very differently than Silicon Valley, he adds. Silicon Valley culture has often been accused of creating a valuation bubble; companies without much revenue being hyped into valuations of hundreds of millions, even billions of dollars. In Europe, there is far more focus on the fundamentals. $1 billion+ value European private tech companies on average have far more revenue and profit than their US counterparts. European investors are requiring companies to “show me the money” before they are willing to buy shares at high prices. This also makes European companies much more attractive targets for large profit-driven Asian investors and strategic buyers.

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