Tech dealmakers in Europe fear the worst.(Brief Article)

Byline: Joshua Jaffe

European high-tech dealmakers fear that already anemic deal flow in venture capital, initial public offerings and mergers and acquisitions is likely to dry up across the board -- especially if military action proves drawn out and bloody in the wake of last week's terrorist assaults.

For more on what dealmakers are facing, see related story: Terror attacks could stifle tech M&A

Venture capital will be the least affected. Gunnar Fenstrom, investment director at Swedish venture capital firm InnovationsKapital in Gothenburg, said early-stage investments takes years to mature. Last week's catastrophe might not bear on these companies' chances for success. "It revolves around exit opportunities and the business climate was such beforehand that people were already looking at 2002 and beyond," he said.

The same conditions apply to an already grim IPO market for technology companies. No startup has filed for an IPO at Europe's main tech bourse, Frankfurt's Neuer Markt, since July. An exchange official said that "judging how difficult the IPO market and surrounding market was before the U.S. tragedy, it probably won't have that much of an impact on the IPO situation."

M&A advisers asserted that in the next few months, the handful of deals in final-stage negotiations would stay on track. But the fate of early-stage negotiations will depend on the tech sector in which a deal is under consideration.

"This is a crisis of such dimension that it will force, in the foreseeable future, the consolidation issue onto the agenda for the small and mid-cap telecommunications, media and technology companies," said Tom Anthofer, managing director at Broadview International Ltd. in London.