Why TECH Needs A Buy & Build Strategy

The M&A market is growing strongly at the moment. Never before have there been so many transactions as last year. In parallel, there is an ever-increasing number of tech companies in the US.

From software to hardware development. The industry is booming. However, most companies do not start directly as a new Facebook or Apple. They start small. With an idea and a small team. Equipped with little capital, they develop their dream. Their solution.

Really ready for the next stage?

But what happens when the product is ready for the market? Then the next stage must be ignited. The young StartUp has to grow up quickly. It has to transform itself. Rebuild and possibly reinvent itself in its structures.

Staffing plans are made. Cash flow is forecast and operational structures are created. Sales. Marketing. Partnerships. Most companies at this stage of life are thinking about organic growth. Hardly any entrepreneurs have M&A on their radar at this size of company. Why should they. The young company is still too small. Not enough money is flowing yet. The exit is far away.

Abbreviation to growth

But what if the exit and growth can be accelerated? M&A is not only the sale of the company. M&A is not just the golden exit. M&A is more. M&A must be as much a part of corporate strategy as liquidity planning. Buying other complementary companies is a strategic decision that every company should think about in the early stages of their business. Finding software developers is difficult. The market is limited. Hiring external companies to do core development of your own product is risky. Building structures takes a long time.

Why not build a group of companies and merge them into one entity? Why not acquire and integrate a strong distribution company? Why not acquire a custom development company and leverage its resources? It sounds simple, but it is the supreme discipline of entrepreneurship. Structures must be in place that are otherwise only found in large corporations.

Integration is the art

Buying is easy. Finding the right companies whose owners are then willing to sell is difficult. Then integrating the company in such a way that you get the greatest possible benefit and don’t scare away any of the target’s employees. That is the fine art.

The big tech companies have long understood this. The small ones need to keep up. They need their own buy & build strategy. Professionally accompanied. Grow your enterprise value.