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 High technology companies have found mergers and acquisitions (M&A) to be one of the most effective strategies to expand their product lines and achieve growth in their top and bottom line results.
In many ways, the recession has increased M&A opportunities as high-tech companies have strong balance sheets and continue to strive for growth.
The current environment is one in which the smaller growth companies need additional resources and larger companies continue to focus on gaining market share and broadening their product base. Combined with the continuing shift in technology trends, companies must be aggressive and innovative to stay ahead of the competition; this often means looking to M&A.
For large high-tech companies, this entails seeking out high margin services to complement existing technology platforms. These can result in transformational deals that, when executed, tend to re-energize core product lines while expanding the services footprint of the acquired company.
Undoubtedly, with the strong cash flow position of large high-tech companies, M&A will continue to be a driving force in expanding local and global opportunities.
M&A also proves to be the most effective way for smaller companies to access capital, for founders and venture capitalist to cash out, or for private equity firms to exit their position.
With banks’ focus on meeting increasing capital requirements, private equity firms focusing on improvements in their portfolio companies, and IPOs at historical lows, M&A is often the best alternative.
Recent M&A have several interesting characteristics:
- The focus is strategic, not financial engineering.
- The strategic intent is on growing market share and growing existing brands, along with acquiring new brands to access new consumer channels. A key objective is global expansion, often beginning with a partnership, particularly in emerging markets such as India, China and Brazil.
- Valuations are down due to reduced multipliers and two years of down earnings.
- M&A is less about reducing costs (this has been the focus of most organizations for the last two years) and more about growth in revenue.
- Funding is less from financial institutions and more from internal resources.
Tompkins International supports M&A activities via:
- Candidate identification and qualification (globally)
- Investment feasibility
- Distribution assessment and strategy
- Competitive intelligence and SWOT analysis
- Market assessment
- Commercial and supply chain due diligence before an acquisition
- First 100 days after M&A
- Supply chain integration
- Achieving long-term supply chain excellence
- Sustaining ongoing market growth
More M&A Resources:
More on Mergers and Acquisitions
M&A in Asia Support and Strategy: Learn from the experts at Technomic Asia.
M&A Podcast Series:
Supply Chain Due Diligence and Mergers and Acquisitions: Click here for listening options and transcript
Four Keys to Success with Mergers and Acquisitions:
Click here for listening options and transcript
Creating Mergers and Acquisitions that Work and Meet Expectations: Click here for listening options and transcript
Blog posts:
Are You an M&A Sinner? Repent and Heed the Lessons Learned!
Private equity firms make supply chains the star when adding value to their portfolio companies.
A caution on mergers and acquisitions and how they affect companies and their supply chains. |
