BDOTechnology Survey 2012

Technology SECTOR
GROWTH SURVEY & insights
2012

Technology Sector Growth Survey 2012

contents
– Research methodology This page

– Foreword 1

1 Growth 2

2 Emerging markets 6

3 Funding 12

4 Risk 16

5 Exit strategies 18

RESEARCH METHODOLOGY
D
uring the first quarter of 2012, 100 interviews were R
epresentatives of companies from both the
carried out with companies in the Technology, Republic of Ireland and Northern Ireland were
Media and Telecoms (TMT) sector in Ireland. The interviewed.
majority of respondents were at MD/CEO or
Financial Controller level (57 per cent). All others B
oth BDO clients and non clients were approached
were members of their organisation's finance team. to take part in the research. The survey was
managed by BDO with the fieldwork for non-BDO
C
ompanies were selected across a range of sub- clients conducted by UCD Michael Smurfit Graduate
sectors within the TMT sector including mobile Business School.
communications, telecommunications equipment,
publishing and printing, broadcasting, e-commerce
retailers and software developers/providers.

A
nnual worldwide revenue 2012 (when given):
Up to €11 million 60%
€11-€50 million 6%
€51-€100 million 7%
Above €100 million 27%

Technology Sector Growth Survey Insights 2012 1

Foreword
It is our great pleasure to share the results of BDO’s 2012 Technology Growth
Survey, which paints a clear picture of this sector’s determination and ambition
to grow, in spite of ongoing uncertainty in the economic environment.

Teresa Morahan at odds with the marked appetite for expansion in evidence in
the sector. However, this low figure is likely to be the result of a
Partner and Head of TMT Sector combination of factors – some companies will feel they have the
tmorahan@bdo.ie resources to fund their own growth while others believe that the
+ 353 1 470 0191 funding opportunities are simply not there.

Historically, banks have not been a key source of capital for the
TMT sector so such misgivings are understandable. However, to
BDO’s annual survey of Technology, Media and Telecoms (TMT) ignore the range of funding options that are currently available
companies draws on the responses of 100 companies based in would be to do a major disservice to the industry. There is clear
Ireland, and the 2012 findings reflects current thinking in an evidence that the banks are more willing to engage with TMT
industry that has largely weathered the domestic challenges of businesses than previously was the case, while private investors,
the last four years and which is among the most internationally- venture capitalists and seed funders are, arguably, offering more
oriented of our business sectors. viable access to capital now than at any time in the last four
years.
Not surprisingly, however, the survey shows that the broader
macro-economic issues playing out over the last 12 months have Also worth highlighting, as businesses plan their funding
impacted on confidence. The fact that 46% of respondents are strategies, is the value of an exit strategy. Investors need to
forecasting revenue growth of 5% or more, in the year ahead, can see a clear path in terms of how they will realise a return on
be seen as a positive but it is down by almost 50% on the 2011 investment but our survey indicates only a small percentage of
figures, when 82% of respondents had these expectations. companies operate with visible exit strategies as part of their
planning process.
The BDO survey is not just about headline figures but the
thinking behind them and, in this case, a retrenchment in The overall impression from the 2012 findings is one of
spending by potential customers would seem to be central to determination grounded in realism. Undoubtedly, the protracted
the downward revision. Whereas, in the 2011 survey, only 9% nature of the recession is providing challenges. However, it is also
of companies indicated that recession was a key macro trend clear that growth is being planned around it rather than impeded
impacting on them, that figure has leaped to 62% in 2012. by it. The focus on both product and service innovation and on
competing in new markets is the strongest evidence of a sector
With clients in traditional markets proving more tentative on actively managing, and in control of, its future.
spending, there has been continued emphasis on the opportunity
in new markets. However, an increased sense of caution is also BDO remains convinced that Ireland is primed for significant
in evidence. In all, 43% of companies planning entry into new growth in the TMT sector in the years ahead and looks forward
markets have moved from the planning to the implementation to playing its role as the adviser of choice to its dynamic range of
stage, as compared to 63% in 2011. companies.

Perhaps the most emblematic findings of the 2012 survey relate My sincere thanks to everyone who participated in this survey.
to funding. Just 28% of companies say they are seeking to obtain We welcome your feedback and invite your participation in future
capital in 2012, a figure that would appear to be significantly surveys.

All figures are from this year’s survey unless otherwise stated.

2 Technology Sector Growth Survey Insights 2012

GROWTH

GROWTH
Expectations
Confident? Those confident outnum-
bered those not confident by 3 to 1.
We asked ow confident are you about the prospect for strong
H
growth in your sector in the coming year? (Base:100)

Very confident 19%
Quite confident 57%
Not confident 25%

2011 survey results
Very confident 15%
Quite confident 56%
Not confident 29%

Expectations for revenue
growth are more modest than
was the case in 2011.


82% of those Companies Surveyed feel that they
will have positive growth in revenues in 2012.
We asked hat is your company’s approximate annual revenue growth target,
W
as a percentage for 2012, 2013 and 2014?(Base: 90)

5% up 46% 82% 52% 56%

0-4% 38% 13% 32% 30%

Negative 16% 5% 16% 14%

This year Responses from our Forecast for 2013 Forecast for 2014
2011 TMT survey

Despite a slight increase in confidence that growth will be a Revenue expectations for 2013 and 2014 are broadly in line with
feature of the sector over the coming year, our survey indicates 2012, with 56% of respondents expecting revenue growth of 5%
that expectations for revenue growth are more modest than was or more in 2014.
the case in 2011. Only 46% of respondents forecast an increase in
revenue of 5% or more, as compared to 82% in 2011.


GROWTH

Growth Strategies

new market strategies and product/service innovation are key to growth.

We asked hat are the top strategies for growth for technology companies? (Base: 90 multi-response (MR))
W

New Market Segments 50% Half of all respondents highlighted new market segments and
product/service innovation as key to their growth, underlining
Product/Service Innovation 48% the importance of identifying new market segments and
championing emerging technologies.
Innovation 18%
In essence, technology companies recognise that ‘standing still’
Organic Growth 17% is not an option if they wish to build on or even maintain current
market position. Innovation is seen as integral to this, not only
Strategic Partnership/Alliances 13% by companies themselves but, increasingly, by Government,
through initiatives such as the RD Tax Credit Scheme and grant
New Talent 13% assistance from various development authorities.

Extension of Product Lines 9%

Investment in Marketing 4%

Other 28%

None 4%

‘Standing still’ is
not an option.


How important will new market
segments be to your company’s
growth in the year ahead?
Version 1 has over 200 customers
across the utilities, public, financial,
pharmaceutical, retail, education
and health sectors, so our client
Top THREE Growth Strategies. base is very broad. We have seen Justin Keatinge
strong growth in Ireland since our Version 1
inception. We had 40% growth
last year, with 25% anticipated
We asked hat are your companies top three strategies for
W
this year. However, it would be
growth in the next three years? (Base: 90 MR)
difficult to keep up that level of
growth without expanding into tributor to how we fund ourselves.
New market segments 50%
new markets. We have started A few years ago we did focus in
Product/service innovation 48% to look at expansion in the UK, on the tax credit but it was not a
Innovation 18% through both organic growth and very positive experience. We found
strategic acquisitions. In terms that not enough of a percentage
of our offering, we provide a full of what we did qualified to make it
range of IT services, from consult- worthwhile. There have been some
ing through to implementation to changes to its operation recently,
support. What has been interesting but our impression remains that
recently is the growing demand for not enough of what we do would
our business intelligence services. qualify to make an application
This is the biggest growing segment worthwhile.
at the moment. Clients need to
understand the trends in their sec- What do you see as the single
tor and we would put a lot of time biggest drag on growth for
into analysing data for them and the year ahead? Recruiting the
presenting it in a digestible form. right staff has been our biggest
challenge over the years and that
Do you see any particular chal- continues to be the case. There are
lenges with regard to funding simply not enough people qualified
innovation? in IT. It isn’t just an Irish problem, it
Most of the RD we would do is in is a world-wide issue. However, we
conjunction with client needs and have had some success in bringing
requirements, so it would be led by in people from Eastern Europe and
the customer’s need for problem further afield. We are very clear
solving in a particular area. We are that we want to create and keep
a profitable company so we are in jobs in Ireland – we don’t want to
the happy position of being able to offshore to other locations – so we
fund that work. Sometimes there compete through higher productiv-
are interesting outcomes that have ity and through better processes.
broader value to our company
and so that feeds into our overall What has most changed in how
capacity to deliver more innovative you plan for growth over the last
offerings. year?
Our planned expansion into the
Has the RD tax credit been UK is a relatively new development
important to your strategic and we are currently in the proc-
growth? ess of evaluating the market and
It hasn’t been a significant con- actively looking for targets.


emerging
markets

Geographical
locations
growth in current markets is not
enough to deliver on growth objectives.
We asked s growth into new or emerging markets important to
I
your companies strategy?

Plan to enter 67%
No plans to enter 33%

Entry into new and emerging markets has been identified as
an important component of corporate strategy for two thirds
of respondents, indicating broad recognition that growth in
current markets is not enough to deliver on their overall growth
objectives.


companies executing the move into new Growth in current
markets has fallen since 2011. markets is not enough
We asked s your company entering into new geographic areas?
I
to deliver on overall
growth objectives.
Entering 43%
Not entering 57%

2011 survey results
Entering 63%
Not entering 37%

However, less than half of respondents in this category (43%)
indicated the move from the planning stage to actual entry
into the new market has taken place. This is notably lower than
the 63% of respondents who were at the entry stage into new
markets in 2011.


emerging markets

Geographical reasons

44% of Companies cited that wanting to grow the business was their main reason
for growth and geographic expansion.

We asked Reasons for growth and expanding geographically?
We asked easons these markets offer good opportunities for
R
(Base: 32 respondents who provided a reason for growth? (Base: 41 responded with reason. Based on top
planning to grow geographically) nine answers and frequency of answer chosen)

To Grow the business 44% Business does well in current markets 45%

To increase proﬁt 22% Want to expand the business 22%

Asia is the place to be 6% Market is Growing 22%

English Speaking 6% Bigger markets abroad 22%

Good contacts abroad 6% Higher demand in this market 11%

Suits the Product 6% Want to increase proﬁt 11%

It's within our budget 3 Gap in the Market 11%

Nothing happening in Ireland 3 Ireland is too Traditional 11%

Close to Ireland 3 English speaking customers 11%

The survey, however, found a welcome pragmatism at the heart Where a company’s product or services are proven in local or
of this expansion – companies are entering new geographic established markets, the potential size of and opportunity within
territories because they need to grow their business and increase new markets was a clear driver of export strategy.
profitability, rather than because competitors and peers are in
these markets too.


Product innovation

most companies favour modification of proven existing products and services.

We asked oes your company plan to develop new products?
D We asked hat market(s) does your company plan on applying
W
53 respondents confirmed that they were, of which: this product/service innovation strategy to?
(Base: 51 MR)

65% would enhance/modify Everywhere 53%
50
existing products/services Home Market 39%
35% would develop new 40 Other 20%
product/service line based on
similar product in the market 30
20

10

0

In this vein, it is worth noting that approximately two thirds of Also worth noting was the overall finding of a clear dichotomy
companies believe that NPD will involve the enhancement and between companies who are focused on developing their
modification of existing products and services already proven in product/service innovation on the home market and those
the marketplace, rather than the development of entirely new looking to the global marketplace. This divide is not surprising,
offerings. given just under 50% of those surveyed indicated definite plans
to enter new geographic markets.


emerging markets

Macro-trends

global economic downturn is now seen by respondents as the most significant
macro-economic trend impacting on their sector.
We asked What are the three most important macro-trends facing your company? (Base: 90 MR)
Change
on 2011
Recession 62% +53%
9%

Pricing pressures 52% 0%

Competitive pressure 51% -6%
57%

Technological growth 24% 0%

Increased use of technology 24% +17%
7%

Competitor consolidation 19% +10%
9%

Regulatory pressure 16% -1%
17%

Globalisation/expand abroad 16% -3%
19%

Globalisation threats 14% -2%
16%

Sector consolidation 8% -12%
20%

Green/environmental issues 8% +3%
5%

Changing work practices 7% +3%
4%

Other 6% -11%
17%
2012 2011

The protracted global economic downturn is now seen by Pricing and competitive pressures remain prominent this year,
respondents as the biggest macro-economic trend impacting with over 50% of companies pointing to these as significantly
on their sector, with companies that cited recession as the key impacting on their business.
macro trend jumping from 9% in 2011 to a sizable 62% in 2012.
Ongoing attention to cost cutting and the delivery of maximum
return from spend look set to continue on the back of this.


TelecityGroup has experienced high- ensures reliable electricity supply to the
profit growth in recent years by opening IT equipment that resides in Irish data
and selling data centre capacity in key centres. The more power IT equipment
internet economy cities across Europe. consumes, the more heat it generates,
One notable expansion for TelecityGroup which raises the importance of data
was in August 2011, when TelecityGroup centre cooling. Ireland’s low ambient air
invested €100 million in the acquisition temperature is perfect for data centre
Maurice Mortell of Irish-owned data centre operator, cooling, as it enables outside air to cool
TelecityGroup Data Electronics. Undoubtedly, Ireland’s the data centre, as opposed to artificially
emerging reputation as the data centre cooled air, reducing costs.
hub of Europe was a key influencer in the
decision. A critical mass of technology giants
continues to be attracted to Ireland.
There are many aspects that make One of the key decisions when expanding
Ireland attractive specifically as a data to a new market is the availability of
centre hub. Ireland is home to many of reliable and well-connected data centres
the world’s leading telecom providers, and Ireland continues to succeed and
many of which provide direct telecom prosper in this area.
links to Europe and the US. Ireland
also has a robust power grid, which

Ongoing attention to
cost cutting and the
delivery of maximum
return from spend look
set to continue on the
back of this.


funding

Funding for
expansion
28% of companies plan on raising
capital in the next three years.
We asked oes your company plan to raise capital in the next
D
three years? (Base: 100)

Plan to raise capital 28%
No plans to raise capital 72%

With the majority of respondents highlighting the development
of new markets and products/services innovation as key drivers
for growth, it may be somewhat surprising that only 28% of
respondents have indicated plans to raise capital. This would
indicate either sufficient funding within companies to fund growth
plans or a strong belief that capital is not available to them.

Have you seen any noteworthy changes in
how companies are approaching VCs over
the last year or two?
The biggest change is that a greater number
of companies are trying to raise capital from
venture capitalists at start-up or at a very early
stage in their development. They are trying to
Maurice Roche achieve accelerated growth and bootstrapping
Delta Partners a company through the first year of operations
is not an option for them. They compete in a
global world and first mover advantages are
important. If the company is showing signs of
early success, the founders try to raise expan-
sion capital sooner than they would have five
or six years ago. In terms of founding teams, we
are seeing younger promoters who have gained
some experience but the corporate ladder is not


capital sources
the perceived unwillingness of banks to
lend is identified as a major obstacle. There is either sufficient
We asked ow does your company plan on raising capital over the
H
funding within companies to
next three years? (Base: 29 MR) fund growth plans or a strong
Bank Loan 55%
belief that capital is not
From the business itself 21%
available to them.
Private Equity 21%

Existing shareholders 13%

Other 35%

Over half (55%) of respondents cited banks as potential sources This raises questions on whether companies are fully aware of
of funding. However, the perceived unwillingness of banks to lend all the funding options available in the marketplace and on the
was identified as a major obstacle by the vast majority. One fifth quality of information circulating within the industry around
of respondents also indicated a belief that there was a lack of funding access.
funds available generally.

for them. The quality of the founding teams is Venture capital annual investment in Ireland has tal infrastructure and supports (state agencies,
very good and their ambition level is high. increased by 42% between 2007 and 2011. Over legal and accounting firm) has also gone through
600 companies raised €1.3 billion in this period. a much-needed learning curve and Ireland is
Do you see funding challenges as undermin- now ranked number two in the EU for the range
ing the potential for growth of otherwise Have funders/potential funders changed how and quality of supports available to technology
viable companies? they go about understanding a business? Is companies.
No. There is a good level of funding available for the knowledge model keeping pace with the
the right companies. The creation of the seed reality on the ground? Any closing thoughts?
funds (four funds with approximately €120m New sectors have emerged in the last five years, Funding of technology companies has come a
under management) has made more capital from social media, gaming, collaborative con- long way over the last 15 years. There is a far
available for start ups and companies in the early sumption and I believe we have only seen the tip better understanding amongst all parties in the
stages of their development. The other domestic of the iceberg in relation to e-commerce within ecosystem. There are experienced entrepreneurs
venture capital funds are also actively investing. Europe. Understanding and evaluating these and venture capitalist in Ireland all of whom have
At a macro level, it is assumed that, because the opportunities requires different metrics, they are a part to play in building on the innovation culture
banks have no money, the availability of capital largely business to consumer opportunities rather that exists in Ireland and hopefully contributing
for technology companies has been affected. This than business to business. Funders have needed to growing the number of successful indigenous
is not true as banks did not lend to this sector. to adapt and they have. In addition venture capi- technology companies that operate from Ireland.


funding

difficulty securing capital
Obtaining capital is difficult for 43%, with banks being unwilling
to lend cited as the most prevalent obstacle.

We asked ow difficult is it for your business to obtain capital? (Base: 100)
H

Neither easy or difficult 36%
Very difficult 23%
Difficult 20%
Not difficult 14%
Not at all difficult 7%

We asked hat are the main obstacles for your business obtaining capital? (Base: 38 MR)
W

Banks not willing to lend 82%

No money available 21%

Fear from investors 11%

Economic climate 11%

Are companies fully
aware of all the funding
options available in the
marketplace?


Tell us a little about your company? consider. As such, it’s had a significant won’t qualify. However, you may very
Magnet Networks was established in impact. As a service provider to both well be surprised at what activities are
2004 and provides advanced phone and consumer and business markets, we are considered RD related. Based on experi-
broadband and entertainment services to constantly looking at ways to provide ence, my advice to any company doing
both residential and business custom- new and innovative offerings. The credit development work is to assume you will
ers in Ireland. We own and run our own received by Magnet Networks was sig- qualify for a credit and take it from there.
network and, to date, have invested nificant. This, together with our clearer In our case, BDO’s engineering expertise
Conor O’Reilly over €120 million in creating the most understanding of what qualifies for RD, facilitated engineer to engineer discus-
Financial Controller advanced telecoms network in the coun- means we can continue our investment in sions and this process was key to the
Magnet Networks try and developing new cutting-edge innovative, leading edge technology that identification of the opportunity but,
services for the Irish market. will allow us to improve and expand our more broadly, the Government really
customer offerings in the Irish market. needs to develop awareness further.
How has gaining the RD credit im-
pacted on the company? What are your thoughts on the RD
There is no doubt that the RD credit tax credit generally?
incentivises businesses to carry out Most companies assume RD is a very
projects that they might not otherwise narrow field and that what they do

What is the RD tax credit? Are there any particular challenges to How have companies used cashflow
Revenue first introduced tax relief on re- claiming the relief? from the RD tax credit?
search and development (RD) expendi- The biggest issue that emerges among There are obvious financial rewards from
ture in 2004 and, subsequently, amended companies is lack of knowledge in terms qualifying for the RD tax credit regime
conditions relating to it over the years. of what activities qualify for RD. and they have, in some cases, thrown a
Section 766 TCA 1997 provides for a tax Misconceptions on the types of activities lifeline to companies. Typically, we would
credit of 25% of incremental expenditure that qualify mean that many companies see the tax credit used to fund more RD
Derek Henry by a company, or group of companies, routinely miss out on this valuable relief. projects within the industry. This would
Head of RD incurred wholly and exclusively on RD. include, where it was deemed necessary,
Tax Services The most recent change was in Finance Can the necessary expertise be the hiring of suitably qualified scientific/
Act 2012. brought in? engineering staff to support the future
At BDO we have established a multi-dis- RD efforts of the company.
How can the RD tax credit benefit ciplinary team approach that targets that In that sense, it can certainly be seen
technology companies? issue. Through the BDO International to be a highly successful initiative by
The main benefit is that companies are RD Centre of Excellence, our Irish tax Revenue, as it reinforces the RD efforts
entitled to a credit of 25% of their in- experts collaborate with a team of highly of companies, and provides an essential
cremental RD expenditure. This credit experienced RD engineers/scientists support as they scale up their businesses
is in addition to the normal corporation to provide a full RD tax solution for and deliver growth to the economy.
tax deduction for the expenditure. This clients. We routinely assist in all aspects
means that a company can achieve an of the claim, for a wide variety of clients,
effective tax deduction of up to 37.5% including technology companies. The
on most RD expenditure. The credit service covers everything from technical
can be offset against a company’s cor- report preparation, financial calculation
poration tax liability of the period. If the and support, to documentation support
company does not have a corporation and interaction with Revenue in the case
tax liability it can claim a cash payment of a review. Our clients have found the
of the value of the unused credit in that BDO approach to be both very effective
period from the tax authorities, subject and efficient. Our goal is to take away,
to certain restrictions. This means the as much as possible, the stress of making
credit can represent a viable, and signifi- the claim for the company, so its in-
cant, source of funding for businesses house staff is freed up to focus on their
with cashflow difficulties. day-to-day work.


risks

Main Risks
The Economic downturn is the greatest
risk impacting on companies now and
making it difficult for them to do
business.

With recession viewed as the most significant trend impacting
on the sector it is also, not surprisingly, perceived as by far the
greatest risk by companies. The ability to survive the economic
downturn is now seen as crucial for many businesses and, closely
linked to this, is the ability to grow revenues and profitability.

One noteworthy shift from 2011 is that the cost of capital, which
had been viewed as the biggest risk, is now seen as a mid-table
issue in 2012. This is less to do with any changes in availability of
funding but rather, as noted in the previous section, with the low
percentage of respondents who state they are actively seeking
funding (28%).

The ability to survive
the economic downturn
is now seen as crucial
for many businesses.


We asked hat are the main risks/challenges facing business in the next three years? (Base: 90 MR)
W
Change
on 2011
Economic downturn 69%
Falling consumer demand 25%
Price competition 24% -4%
28%
Competitors consolidating 16%
Lack of funding 15%
Foreign exchange risk 13%
Cost of capital 12% -27%
39%
Recruitment issues 9%
Suppliers raising prices 8%
Customers extending credit terms 6% -8%
14%
Employee discontent 5%
Austerity regulation 5%
Lack of funds in sales and marketing 5%
Lack of funds in RD 4%
None 6%
Other 31%

2012 Top three risks in 2011

What do you consider to be the and risks. They have come to expect a initiatives in areas where there are
biggest risks impacting on your very high level of security protection serious skills shortages. One very good
business’s growth right now? from their IT service providers. initiative by the Government is the
Recruiting the right talent, as mentioned retraining of professionals from other
before, is an ongoing issue for us. With Are there any issues impacting on your industries into the IT area. As we start to
the increasing number of multinational IT business you feel would be easy to see a throughput of graduates from these
companies locating here, that challenge resolve if the right steps were taken? programmes, I would expect that to have
Justin Keatinge is only going to get bigger. If there was any change that could be a positive impact.
Version 1 made easily that would have significant
While not a risk to our business per se, impact it would be a fast-track visa
managing the security concerns of our process for highly-skilled people in
clients is an area where we have seen the IT industry. That would be most
significant new interest recently. IT welcome. The Government took some
security has become a headline issue steps in the last Budget to make it easier
across the business world and companies for international business executives to
are more and more aware of the issues locate here. They might look at similar


exit
strategies

Less than one in five companies have
plans to introduce an exit strategy
element into their business strategy.
We asked Does your company plan to introduce an exit strategy
into their business strategy? (Base: 100)

No exit strategy 78% (-4)
Exit strategy 16% (-2)
Don't know 6%

2011 survey results
No exit strategy 82%
Exit strategy 18%

The majority of respondents indicated they did not have an
exit strategy; a position many may do well to revisit in the
coming year. How capital is realised is an important factor for
investors when considering an investment and, without a clear
exit strategy, companies may represent a less attractive funding
proposition for them.

When considered as an
investment, companies without a
clear exit strategy may be viewed
as a less attractive proposition.


We asked Of the 16% of companies who planned to introduce an We asked Of the 16% of companies who planned to introduce an
exit strategy: In what time frame would they do so? exit strategy: How do they plan to execute it?

One to two years 75% (+44) Trade sell 38%
Three to five years 17% (-41) Sell to competition 31%
Greater than 5 years 8% (-3) Sell to private equity 25%
Management buy-out 6%
2011 survey results
One to two years 31%
Three to five years 58%
Greater than five years 11%

What factors ultimately drove your Was the selection of a particular time have been able to go back to the market
exit strategy? frame important in the end? for a couple of years.
When CarTrawler was started in 2004, it I would say it was. We had received a lot
was the first of its kind in the world, but of unsolicited interest and approaches What is your feeling having come
was set up with over 20-years industry over the years. Our revenues and growth through the process?
experience behind it. It had a very clear levels where very strong and our future My reflections would be that it was a
goal of providing a next-generation forecasting was also very positive. very wise strategy to plan for an exit
Greg Turley car rental distribution system and was Perhaps most important of all was the from the very start, as this sped up the
Roundtown able to deliver on that. However, it was fact that there were very few technology due diligence and legal work and reduced
Investments Ltd started with an exit strategy in mind, and companies with the growth and global our costs. My advice to others with the
the company was always run with this as footprint that we had at that time, so we same strategy in mind would be to pre-
its main objective. really could look for a premium in our agree your adviser, legal and accountancy
selling price. fees in advance, as best as you can. It is
What was the time frame of the also imperative that you have the very
strategy? Was the strategy in any way reversible? best corporate advisers working with you
When I set up CarTrawler, I didn’t have We only had one strategy and that was throughout the process. The best bring
a specific time frame with regard to my for an exit at the right time at the right great value to the business and alleviate a
exit, but I did have an exit price in mind price through a majority sale. If the proc- lot of pressure, so you can focus on run-
and achieving that was always key to ess had not been successful, we could ning and growing the company.
reaching my targeted goal. have easily continued, but might not


A Dedicated TMT Sector team
BDO’s Technology, Media and We advise companies on:
Telecoms (TMT) team works across
all advisory services to help your Audit
business sustain growth and plan
Internal Audit
for the future.
Corporate Finance
We adopt a partner-led approach and work
with our clients to develop strong collaborative Corporate Recovery
relationships while providing commercial insights Mergers and Acquisitions
and practical advice.
Commercial Due Diligence
BDO understands the challenges TMT companies
Compliance and Risk
face in every phase of their growth. We work with
many leading brands and companies ranging in size Revenue Recognition Issues
from pre-profit start-ups to listed companies. With
detailed sector knowledge, considerable market Research Development Costs and Tax Credits
expertise, innovative services and international Initial Public Offerings
reach, our TMT team is dedicated to ensuring your
strategic objectives are given the same attention as Expatriate Tax, Incentives and Rewards
daily operational demands. Corporate Structuring
Cross Border Transactions

For more information please contact:
Teresa Morahan, Partner, on 01 470 0191, or tmorahan@bdo.ie

Acknowledgements
BDO wishes to extend thanks for the support and time
given from the contributors and guest speakers:

Maurice Mortell, TelecityGroup

Maurice Roche, Delta Partners

Greg Turley, Roundtown Investments Ltd

Justin Keatinge, Version1

Conor O’Reilly, Magnet Networks

Special thanks also to all the companies who participated in the survey,
without their participation this report would not be possible.

Finally thanks to UCD Michael Smurfit Graduate Business School –
Marketing Development Programme who conducted the fieldwork for the
non-BDO client survey.

Technology Sector Growth Survey Insights 2012

BDO
BDO have been advising Irish businesses for 30 years. The BDO Our areas of expertise
approach is unlike other accounting organisations. We're different At BDO we believe that the best advice comes from experts with
because we have the flexible personal characteristics of a local firm, knowledge in areas relevant to our clients. We have partner-led
together with the specific expertise, world wide network and strength specialist teams advising in:
of the large scale global players. –– udit
A

––
Internal Audit
BDO is a member firm of the BDO global network with over 110
member firms.Our membership of the BDO global network affords –– ax
T

us global reach and a consistency of service delivery to the highest –– dvisory
A

standard on cross-border assignments. ––
Risk
––
Corporate Finance Recovery
T
here is something different about BDO. –– onsulting Services
C

They are more than just my accountants, –– II Scheme
E

it’s like they are an integral part of my –– hareholder Advisory Services
S

–– utsourcing
O

management team.
BDO client from the technology sector –– orporate Secretarial
C

– Payroll Services.

A Unique Focus We also have expert sectoral teams with audit, tax and advisory experts
Our expertise and understanding of the Irish market and growth- offering unique knowledge and credentials in:
oriented businesses differentiates us from our competitors. We use –– echnology, Media Telecoms (Tmt)
T

our knowledge to bring a fresh approach and insight to all our client
––
Agri-Food
assignments.
––
Retail
––
Professional Services
–– ealthcare
H

–– otel, Leisure, Tourism
H

–– inancial Services
F

––
Green Energy
––
Business Owner Services
––
Sports Advisory.

We will continue to tailor our services to the needs of Irish business.
To this end we have established a comprehensive client listening
programme, using face to face interviews to gather real feedback on
our service levels and our understanding. That is why we can say with
confidence that what matters to our clients shapes our service to them.

BDO Dublin BDO Limerick BDO BELFAST
Beaux Lane House Four Michael Street The Red Church Lindsay House
Mercer Street Lower Limerick Henry Street 10 Callender Street
Dublin 2 Limerick Belfast
BT1 5BN

t: +353 1 470 0000 t: +353 61 414 455 t: +353 61 310 311 t: +44 28 9043 9009

info@bdo.ie

www.bdo.ie

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied
upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional
advice. Please contact BDO to discuss these matters in the context of your particular circumstances. BDO, its partners, employees and agents do not accept or
assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any
decision based on it.
BDO is authorised by the Institute of Chartered Accountants in Ireland to carry on investment business.
BDO, a partnership established under Irish Law, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the
international BDO network of independent members firms.
BDO is the brand name for the BDO International network and for each of the BDO Member Firms.
Contents and Data included in this document should not be replicated without prior written consent from BDO. All rights reserved.

© BDO 2012
v1.20120419

BDOTechnology Survey 2012

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