Merger and acquisition deals brought big business in 2014 and are projected to continue to grow in 2015.
Merger and acquisition deals in the tech industry were booming in 2014 and are projected to continue to grow through 2015. These findings were reported by Mooreland Partners, a leading independent investment bank that focuses on merger and acquisition services. The report was based on the review of 4,186 transactions that spanned the globe during 2014.
The reported 4,186 deals represent a 14 percent increase from the previous year and over $1 trillion spent on these transactions. There was also a 50 percent increase in the number of deals that valued over $500 million during the same time period. Based on the same data, Google, Yahoo, Microsoft, Facebook and Twitter took the most active role in acquiring other businesses.
Motivation behind the growth
Merger and acquisition deals are motivated by a number of factors, but some of the main reasons include:
- Gaps. Whether a business needs additional, experienced people or resources unique to a company that is being acquired, a primary motivator is often the need to fill in gaps present in the purchasing business.
- Relevancy. Purchasing or merging with a company that has unique technological offerings can help a business to remain relevant in a competitive market.
Regardless of the reported reason for the transaction, these deals are ultimately about growth.
Tips to structuring a successful merger and acquisition deal
Although growth can be favorable for a business, an unwise deal could be catastrophic. The following tips can help mitigate these risks:
- Due diligence. Arguably the most important step towards a successful deal is a detailed due diligence investigation. This includes a review of the organization of the business including financial information as well as the company’s physical and intellectual assets.
- Culture. Financial experts with Forbes recommend taking a moment to assess the culture not only of your own business, but of the target acquisition. Taking steps to proactively increase the compatibility of the two cultures before the deal can reduce unease within the company that could lead to decreased productivity and ultimately hurt the bottom line.
- Management. It is also wise to ensure that there is sufficient management in place to help navigate employees through the transition and better ensure the evolution goes smoothly.
These are just a few tips that can help increase the odds of a successful transition during and after a merger or acquisition transaction. Due to the complex nature of these deals, t is wise for businesses that are considering one of these transactions to seek the legal counsel of an experienced merger, acquisition and transfer lawyer. This legal professional can help navigate your business through the transaction while advocating for the best interest of your business.
