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News - February, 2014

European Single Secondary Direct Market valued at €1 billion

February 3, 2014 – The European single secondary direct market for technology firms has been valued at €1 billion per annum, according to in-house research conducted by Cipio Partners. A total of 60 deals per annum were tracked in 2012 and 2013, representing over €600 million in annual transaction value. An estimated further €400 million in undisclosed deals increases this amount to €1 billion.

Over the past decade, two key developments have been responsible for creating such a sizeable market for buying and selling single secondary directs (as opposed to portfolio secondary direct deals)

  • The first change is the increased length in average holding periods, which has grown from an average of three to seven years over the past decade or so. The misalignment of venture capital funds and corporate investment programmes’ investment horizons with this business reality has created a pent-up demand for liquidity.
  • The second change is that today there are more mature technology businesses in Europe that already have revenues of €10-100 million or above, yet are still intent on growing further before selling. Minority positions in these more mature technology businesses are being actively traded.

Cipio Partners conducted its research though analysing publicly available data, as well as accessing confidential private information to better understand the size of the market and the nature of assets being traded.

Amongst the secondary direct transactions analysed, most sellers were private equity or venture capital firms. Only 18% of sellers involved business angels or non-traditional private equity investors. Transactions sizes were to 75% below €15 million. However, some much larger transactions have occurred as well.

Around 85% of the transactions involved companies located in France, Germany, Scandinavia and the United Kingdom. The typical target company was 11 years old and had less than 200 employees. Software and Internet accounted for about 50% of the sectors concerned.

Media contact
Sophie von Eberhardt: nBvylbWVkaWFAY2lwaW9wYXJ0bmVycy5jb20=