Two Finnish IT companies announce corporate acquisitions from abroad

Lauri Ratia

Thomas Hoyer

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The time for high-priced corporate purchases seems to be past for now: companies will soon be available for relatively little money, especially if a buyer has cash available.
     One indication of the trend are the purchases made by two Finnish IT companies early in the week.
     
The low prices do not mean that the number of corporate purchases would necessarily increase. Few are selling their companies now, unless forced to do so by economic circumstances.
     The Finnish company Tecnomen bought the Indian software company Lifetree Convergence for EUR 33 million, while Aldata bought a business unit of US company Information Resources for just under EUR 8 million.
     
Both deals required more than a year of behind-the-scenes negotiations. In both cases, the sales price came down considerably as talks progressed. “The decline was in the tens of percents”, says Aldata’s CFO Thomas Hoyer.
     According to Hoyer, plans for the deal date back to August last year. The lower price “sped up the process from the buyer’s point of view, but on the other hand, it was more difficult for the seller to accept the reality”, he says.
     Tecnomen negotiated its deal for over a year.
     “It would not have been imaginable for the deal to have emerged from the original starting points”, says Lauri Ratia, the company’s Chairman of the Board.
     
The weaker economic situation and the sharp decline in the market did not speed up the closing of the Tecnomen deal, Ratia says; it actually made it more difficult.
     Aldata’s Hoyer says that the deal was helped along by the fact that the company paid cash for its purchase. “We took out a loan in the autumn when we saw that the market situation was changing.
     Aldata is considering other corporate purchases as well, Hoyer says. “But it seems that in Europe, there is still too much diversity in opinion between buyers and sellers on prices”, he says.
      Sami Lampinen, CEO of Inventure Oy, an investment company in the field of technology, confirms that there is now a big differential in views on prices, and as financing is hard to come by, not many corporate purchases are being made.
     
Ratia and Hoyer both believe that the number of corporate purchases in the technology sector will nevertheless increase.
     The situation is similar to that in the housing market: with prices going down, sellers put off their decisions until better times, if at all possible.
      Lampinen expects that the downturn will separate the wheat from the chaff in the coming years. Companies which do not make it through the hard times, will probably go for a very low price.


Links:
  Tecnomen stock exchange release 15.12.08: Tecnomen and Lifetree Combine
  Aldata press release 16.12.08: ALDATA ACQUIRES APOLLO RETAIL SPACE PLANNING BUSINESS FROM IRI

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