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09.4

The European Exit Environment

2018 has been a truly remarkable and a record-breaking year for outsized outcomes in the European tech industry, capped by Spotify's giant $25 billion direct listing

Top 10 largest VC-backed exits by value at exit in 2018, IPO & M&A

Top 10 largest VC-backed M&A exits by value at exit in 2018

Building on top of several large European tech IPOs, Europe has also seen significant exit value via M&A in 2018. Multibillion acquisitions, such as iZettle's $2 billion+ sale to PayPal, have helped to drive the total value of M&A of VC-backed European tech companies to $31 billion in the first nine months of 2018.

European M&A exit value ($B) and count by company type (VC-backed or not)

Legend

  • VC-backed exit value
  • Non-VC-backed exit value
Note:
M&A exit value based on total enterprise value of all tracked transactions

Strong activity in M&A of VC-backed European tech companies has been underpinned by a record number of acquisitions with an enterprise value of more than $500 million at exit, as well as record numbers of acquisitions of European VC-backed companies acquired for between $250 million and $500 million.

VC-backed M&A exit count by deal size

Legend

  • $0-$100M
  • $100-$250M
  • $250-$500M
  • $500M+

Contrary to the popular but false narrative that European tech companies exit primarily to US-based buyers, the share of M&A transactions of European tech companies that involved European acquirers exceeded more than 50% of all M&A transactions in 2018, as it has done in each of the past four years.

Share of M&A exits by buyer region by year

Legend

  • Europe
  • USA and Canada
  • Asia
  • Other (incl. unknown buyer counry)
Note:
Only VC-backed deals included. 2018 numbers estimated by Dealroom.co.

Non-tech corporate investment and M&A activity has increased from year to year

Investments and M&A activity of non-tech corporates involving European tech companies

Legend

  • Investments
  • M&A transactions

Europe's traditional companies continue to look at M&A as a strategy to accelerate their response to the digitization of their core industries and in several cases took material bets of more than $500 million. The largest single acquisition in 2018 involved Richemont's completion of the 100% acquisition of digital commerce company, Yoox Net-a-Porter, for an implied enterprise value of more than $5 billion.

Largest acquisitions of European tech companies by European non-tech companies in 2018, by EV

Chinese companies have become active, though infrequent, acquirers in the European tech ecosystem as they increasingly seek to expand overseas and build their international footprints. Alibaba's acquisition of a majority stake in Istanbul's Trendyol for $750 million was the most significant M&A transaction in 2018 involving a European tech company and a Chinese acquirer.

Selected acquisitions of European tech companies by Chinese acquirers