Y2K Economic Effects Begin

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LONDON (CNNfn) - Fears of the impact of the millennium bug are forcing U.K. venture capitalists to hold off doing deals as 1999 draws to a close, according to a survey released Monday.

Investors, spooked by the possible impact of the computer glitch on all manner of companies, are either delaying deals or demanding safeguards from sellers, the report by the accounting firm BDO Stoy Hayward suggested.

The survey found that more than three quarters of 98 venture capitalists surveyed are now looking for binding guarantees from companies in which they invest. They are demanding proof that computer systems are able to cope with the change to the next millennium.

The firm warned that entrepreneurs looking to secure venture capital funding in the final three months of 1999 may struggle to get their hands on cash.

Peter Hemington, head of mergers and acquisitions at BDO, said "They [owners] need to act quickly in order to achieve a sale in the late summer or early autumn."

BDO found that most venture capital companies are taking a hard look at the implications of the millennium bug on any of the companies they are planning to acquire.

-- John Ainsworth (ainsje@cstone.net), July 05, 1999


Posted 05/07/99 11:56am by Linda Harrison

Y2K bug eats into VC deals

UK venture-capital firms are delaying business deals for fear of the Y2K bug, according to a BDO Stoy Hayward report.

Venture-capital houses are postponing acquisitions and sales until next year due to concerns that companies are not ready for the millennium threat.

Around 34 per cent of the 96 venture-capital firms questioned by accountancy firm BDO Stoy Hayward forecast fewer deals in the last three months of this year  and all because of the bug.

Peter Hemington, head of mergers and acquisitions at BDO Stoy Hayward, said: "Owners of companies wishing to sell or seeking finance could find it difficult to get their deal away in the last quarter."

He advised companies to act quickly to get a sale in late summer or early autumn to give buyers time to iron out possible glitches.

Companies most likely to be affected by the bug were financial services, IT and distribution businesses, said Hemington.

"A couple of houses have said off-the-record their investment committees are demanding good reasons not to delay acquisitions in affected sectors in the last quarter until after January," he added.

The findings follow last weeks statement by Taskforce 2000, the government watchdog, that 300 of the UKs biggest companies had not started to prepare for the bug. .

Link: http://www.theregister.co.uk/990705-00011.html

-- (trend@watcher.now), July 05, 1999.

http://www.theregister.co.uk/990705-000011.html"> Link: http://www.theregister.co.uk/990705-000011.html

-- (trend@watcher.now), July 05, 1999.

(1) 2/3 of VCs are still planning to invest.

(2) It's good to see someone playing it cautious with their money!

-- Mad Monk (madmonk@hawaiian.net), July 05, 1999.

Remember, the Venture Capitalists are the "early adopters" of the investment world.

It's only a matter of time until this hits the stock markets.

-- nothere nothere (notherethere@hotmail.com), July 06, 1999.

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