Whether it's expanding into new territories and markets or taking on new product lines, merging or acquiring another business is a strategy that can be hugely rewarding. In the case of the lower middle market, it can lead to the acquisition of entirely new intellectual property, essentially allowing a business to leapfrog the competition with an injection of extensive experience and expertise. But M&As can also be fraught with difficulties. And even the biggest of companies can have problems. Back in 2014, Google sold Motorola Mobility (the handset part of Motorola) to Lenovo for $2.91bn. The sale came just two years after Google bought Motorola Mobility for $12.5bn. A considerable paper loss, then, but Google got to keep a range of Motorola patents. It's important to remember that M&As aren't just for mega-corporations. Lots of companies have their eye on the 'exit' even when they're being set up, and a merger or acquisition is one such exit route. Tech firms, just like those in any other industry, need to manage the process carefully.
Know what you are buying
M&As in the tech sector have all the standard issues and problems of integration, plus a few nuances that are particular to it. A company buying another's capabilities needs to be confident that the economics work, and be clear about the financial investment needed to take the technology to the next level. This is often the most difficult part of an M&A.
Take care of the tribes
Loyal supporters aren't just a feature of the lower middle market – they are what every brand wants to build. But in small business, even subtle differences to a product can make a huge difference. Just look at how loyal people are to smartphone makers. So making the right decisions about bringing two brands together is vital. Both the buyer and the seller need to think about how a combined product would be branded in the future, and what effect this may have on the customer base.
Businesses fail to integrate effectively
The integration of different technologies can be the greatest difficulty for small business sector post-M&A, something that may determine its ultimate success. It's for this reason that those tech companies that have their sights set on being acquired should ensure that their technology is scalable and can be easily integrated into another system. Integration is key for companies to accelerate change.
SA Capital Partners have years of experience in helping mergers and acquisitions run smoothly. Even if you’re as prepared as possible, the process can bring up unforeseen challenges, but with the time we’ve spent doing these sort of deals in the lower middle market, a lot of those surprises aren’t new to us. Let our knowledge and experience be your asset as you look at M&As as possible business opportunities for the future.
About SA Capital Partners: SA Capital Partners is an innovative financial services firm that specializes in mergers & acquisitions advisory and capital raising for lower middle market businesses. We aspire to give all the tools necessary to complete any transaction. SA Capital Partner’s financial services industry specialists provide comprehensive, integrated solutions to banking transactions. Our breadth of services and industry knowledge allow us to understand each client’s unique business needs. Our goal is to make all financial services available to every small business. Website: www.sacapitalpartnersllc.com Phone: (212)-235-2761 Email: info@sacapitalpartnersllc.com #sacapitalpartners #sacapital #sacapitalpartnersllc