Dealing With M&A For Technology Companies

Deferring Losses From Mergers And Acquisition

When it comes to mergers and acquisitions, or M&A, there is bound to be some level of loss during the transition. This can be managed in ways which reduces unprofitable outcomes, allowing for more streamlined forward operations. There are going to be a few best practices you want to consider for best results here, and we’ll explore them briefly in this writing.

Be flexible, above all else. For example, when acquiring a new company, you may be able to cut out thousands from the company you’re acquiring’s budget by using tech business solutions like Clockspot over, say, an internal department. Decisions like these will depend on the business. As you approach M&A, careful strategy such as the following will be key.

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Careful “Courtship”

Before any sort of integration occurs in an M&A sense, you need to be sure you’re working with the right people. If you’re going to absorb another company, or become a partner with them, it should be expected this will result in requisite profit for your organization. Now sometimes, what you’re doing is fulfilling a startup’s potential they can’t realize alone.

However, sometimes what appears to be a good buy could prove being such a liability that going forward you’re unable to do anything profitable. For a tech company, this can be an especially difficult vetting process, because future outcomes of new innovations can be indeterminate.

Sometimes Startups Succeed And Corporations Fail

Nobody thought MySpace would soften the market for Facebook, which would lead to social control systems incidentally trafficking society in terms of digital socialization. At least, nobody in the business world expected this, until it had already become something fundamental. Meanwhile, even big-ticket businesses have a lemon every now and again.

Google Glass didn’t work out for Google, they lost money. Now that wasn’t a startup available for acquisition, but it does represent a technology innovation that seemed like a sure bet from high echelons of tech professionalism—yet it sank without a ripple. Sometimes startups don’t look like a good idea, sometimes they do.

Consultation is key in determining the best options for your operation, as is contingency planning—perhaps reduce processing costs for credit cards as a means of deferring losses from a merger, or something similar, by changing certain operational vendors. Hopefully you don’t need such contingencies, but knowing where to find them can be useful.

Best Practices In M&A Realization: Four Primary Stages

Once you’ve chosen the right company to combine with yours one way or another, your next step will be mastering the four stages of M&A integration. There are some unique schools of thought on this, but if you’re specifically acquiring an IT department of some kind, the following steps are worth considering.

First there’s planning for integration. The company you’re bringing aboard, do they already have value maximization plans that are proven, and can be replicated? If so, then you want to hinder them as little as possible during the integration process. This is a question that should be answered before integration is approached.

If there isn’t such proven, repeatable effectiveness, there may still be worth in acquiring a given IT group; but you’ll need to carefully plan integration to overcome ineffective operations. Good or bad, this leads to the second stage of the process: determining sufficient resources for managing a given M&A project are available. If not, you need to facilitate their availability.

There are going to be decisions which need to be made by executive personnel, and this leads to the third stage of the process: facilitating communication between IT groups and non-IT decision-making personnel.

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Documentation And Protocols Development For Future M&A

Once you’ve determined planning, available processes, materials, and communication, you’ll want to determine how to continuously optimize the new relationship you’ve put together—this will require effective documentation protocols.

Documentation helps you determine which solutions work, and which ones don’t. It’s essential to develop a means of properly logging all steps of the M&A process. Going forward, documentation will be key in optimization.

This will additionally help you predict which mergers or acquisitions are worth considering in the future. Certainly there will be mistakes in the M&A process, but tactics like these help reduce obvious missteps.