Tuesday, April 24, 2007

Tech buyouts and bubbles

Here's a feature I wrote recently for Corporate Financier (the magazine of the Corporate Finance Faculty of the ICAEW), as a handy downloadable PDF. It's looking at M&A activity in the tech sector, examining what's driving the current high level of deals, and asking whether there's any risk of another tech bubble. There's also some nice pictures of balloons.

The feature also ties in with a couple of bits of original research I'm currently working on as part of my Master's in Economics & Finance. The first is an event study for the Industrial Organisation module, which is focusing on a deal mentioned in the feature - Sage Group's acquisition bid for Norway's Visma, which was trumped by a rival bid from HgCapital. The main question is whether the market saw the failure of Sage's bid as damaging its prospects, as potentially reflected in the group's share price.

The second is my dissertation, which I'll be working on over this summer. My proposal (yet to be formally accepted, and subject to modification) is an analysis of recent market behaviour in the clean energy sector, with an eye to identifying behaviour characteristic of a speculative bubble. As I briefly mention in the CF feature, the public markets are currently showing a strong appetite for clean energy and related businesses, and there has been some talk that there's a bubble developing (for instance, see this report from Forum for the Future). I'll be doing a little number-crunching on that question. More as it happens.

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