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Futureproofing Your Tech Company Requires A Solid M&A Strategy

Written by: Ed Gehres, Executive Contributor

Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.

 

If you run a software or IT services company, you know just how tough the tech industry can be. Lose sight of your market, trip up on customer success and satisfaction, or fail to continually evolve and you will be left behind before you even know it. In order to future-proof your tech company, you simply must engage in strategic mergers and acquisitions.

Futureproofing Starts by Paying Attention to Trends


Futureproofing first requires that you keep up to date on what opportunities exist for further developing your products or your strategy for reaching greater market share. Various sources of prognostication offer insights into these future directions of technology:

  • Deloitte’s annual strategy report on the tech sector that was republished in the Wall Street Journal in March 2022 targeted leveling up in Everything-as-a-Service (XaaS), creating the supply chains of the future, solutions for the hybrid workforce and supporting improved sustainability as the key areas of strategic focus for tech firms.

  • The annual industry outlook report published by the Computing Technology Industry Association (CompTIA) in October 2021 focused on a range of possibilities, including cybersecurity, the changing workplace, changes in business travel innovation, addressing chip supply chain woes and more granular software development efforts.

  • At the annual world conference hosted by the Technology Services Industry Association (TSIA), Executive Director Thomas Lah touted the latest book in his series of tech industry strategic treatises, Digital Hesitation: Why B2B Companies Aren’t Reaching their Full Digital Potential. Lah’s work and the message provide much more tactical, actionable guidance than the other sources above. According to Lah, tech companies need to leverage data and the customer experience or journey to drive more effective sales and gain market penetration. The underlying opportunity for tech companies in the message is the need for improved interoperability of the systems used to drive digitally-driven sales, as well as the continued need to address the intractable complexity currently inherent in most tech solutions.

Is your company involved in any of these areas of growth for the future? Do you want it to be? Do you maybe at least want to be a part of an overall solution, or do you feel like your company could be providing a piece of the solution or an enabling service to solve or participate in any of these future areas of innovation?


If so, then it’s likely you should be looking into strategic mergers and acquisitions (M&A). If you have a small to mid-sized company or a fairly recent start-up company, you may not have had the opportunity to engage in a lot of M&A. But M&A is exactly how many of tech’s top brands achieved their success.

Using Mergers and Acquisitions for Futureproofing


At the companies I have worked for in tech, M&A involved deals from 6 figures all the way up to 9 figures. Each deal was strategically planned and involved one or more of the following strategic M&A goals:

  • Adding complementary functionality to your product offering

  • Acquiring additional customers for your products and services

  • Acquiring additional team members, know-how, equipment, locations, or other assets that could help fuel additional growth

  • Eliminating competitors from the market, or joining forces with a worthy competitor, although you have to be careful: you can’t be trying to eliminate competition altogether

  • Expanding into a new market or market segment

  • Acquiring additional revenue and EBITDA to help drive additional growth for your company

  • Selling off valuable but non-strategic assets to provide funds for more strategic aims

And those are only a few of the more common reasons for M&A in tech. If you also consider the tech innovation trends discussed above, another great reason for engaging in M&A activity might be to grab onto an opportunity to be at the cutting edge in tech. The chance to become one of the oft-written about tech unicorns.

  • For example, the best solution to supply chain issues might be a combination of existing point solutions that, together, address a much more compelling need in the market than any of those solutions alone. Does your company provide one of these point solutions?

  • The best way to drive business travel innovations might be by combining with other companies that have complementary or adjacent functionality or by acquiring other companies that have the pieces of the solution or the strategic customers that you currently lack.

  • Dealing with the interoperability issues posited by Lah might just require merging several of those products together in order to get the highly functional, fully integrated solution that everyone needs.

Each one of these possibilities requires strategy. You need to pick a direction and a plan and then know what doors to knock on to achieve the combinations that will move your company in that strategic direction. That is no small task, and one for which getting professional, experienced assistance is key.

Successful M&A Requires a Solid Strategy


Doing M&A right involves strategy, targeting, due diligence, negotiations, solid plans for post-closing integration, and a good amount of paperwork. You need a team of trusted individuals in your company to help carry it out. And you need a trusted, experienced, independent partner that can help guide you through the process and ensure you achieve your intended goals.


The company that I work with for mid-market M&A that has over 20 years of experience handling all aspects of the process and has done more deals than anyone else in that market segment is True North Mergers & Acquisitions. Based in Minneapolis, but with satellite offices across the country and affiliates around the world, True North has a team of business veterans that focuses on companies with $5M - $150M in annual revenue that is looking to sell, buy or merge their businesses. They have a full support staff with legal, accounting and business professionals to ensure the deal process flows smoothly and they have a proven transactional methodology that ensures you achieve the results that you need.


Working with mid-sized companies to develop futureproofing M&A strategy is what the team and I at True North do. Starting a strategy engagement costs less than hiring a new manager and will result in mapping out appropriate suitors or targets for your company and then working together toward closing one or more deals, securing your company’s future in tech.


So go for it. Look to the future. Take the next step. Make plans for how your company will make it to the next level and have an impact on the future of tech. Reach out to me directly at egehres@tnma.com or to True North at advisors@tnma.com and let’s talk about a strategy project to get your company futureproofed.


Follow me on LinkedIn, and visit my website for more info or to get my help getting your team focused on results!


 

Ed Gehres, Executive Contributor Brainz Magazine

Ed Gehres is the business and M&A advisor and attorney you wish you had, with over 30 years of practical hands-on experience building companies across multiple industries, and for start-ups through the Fortune Top-10. With deep roots in technology, he's worked with companies building solutions across multiple industries including digital marketing, transportation, entertainment and media, pharmaceuticals, and even cannabis. With both hands-on, practical business experience as well as legal expertise, if you’re looking to build, expand or sell your company, he’s the advisor you need.

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