Mergers and acquisitions among technology companies are expected to play an increasingly influential role in the development of the sector over the next 12 months, according to a survey of tech directors. But while the bottom of the market is now broadly considered to have passed, hopes of a resurgence in technology IPOs is predicted to be muted in the coming months.

According to a report by business advisory firm Deloitte, 60% of firms are optimistic about the outlook for M&A for the sector in the next 12 months. The survey looks at technology M&A and capital market trends for 2010/11 and measures forward looking expectations of technology companies. Sector consolidation and opportunistic acquisitions are seen as key drivers for more activity, whilst a strong strategic alignment and clear, well led, integration plan are seen as critical for acquisition success. The trend of well funded companies picking off targets continues, driven by a desire to accelerate their own growth plans and consolidate their markets.

A string of four tech IPOs in London during March and April had sparked talk of a new wave of listings by growth companies, however continuing market uncertainty now looks to have scotched those ideas. Indeed, it is now thought that valuations will remain stable or see just moderate improvement over the coming year.

Among the new listings was education and training technologies group Promethean World (LON:PRW), which listed on London’s Main Market in April, raising a total of £185.7m. Soon afterwards, the company reported a strong first three months of the year with revenues up by 49% to £53.9m. Its shares are currently trading at around 175p, down from an IPO price of 200p. Elsewhere, digital security and surveillance specialist Digital Barriers (LON:DGB) joined AIM in early March, raising £20m at 100p per share. Its shares are currently trading just short of the listing price of 138p. The other companies were primary health software provider EMIS Group (LON:EMIS) which joined AIM at the end of March, and Malaysian data centre operator CSF Group (LON:CSFG) which raised £28m at 55p per share.

Conor Cahill, a technology corporate finance partner at Deloitte, said: “Whilst technology company IPOs have threatened to spark back to life with four technology floats in the last six months, it may be…

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