Upbeat forecast for venture capital market

Link: UK venture capital market tumbles

Optimism is based on confidence that deal activity will pick up as companies dispose of non-core subsidiaries, providing significant opportunities.

Almost half of the VCs surveyed said they expected an increase in the volume of transactions, with only 5% saying activity would fall.

This new found optimism is despite a recent study undertaken by Ernst & Young and VentureOne which found that venture capital deals negotiated in the UK had shrunk dramatically in the second quarter of the year – falling from 99 deals worth £306m to just 44 worth £208m.

Mark Pacitti, Deloitte & Touche private equity partner said, ‘The opposing views on the economy and deal activity illustrate that VCs hope to capitalise on the tough economic conditions, with reduced competition from trade and lower pricing.

‘Indeed, 54% of the VCs surveyed expect deal pricing to reduce over the next six months (28% last quarter) as Stock Market volatility takes it toll. Add to that the large private equity funds available and VCs look set to dominate M&A activity for the period ahead.’

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