Three things to know about mergers and technologies and technology

Mergers and acquisitions are a key growth strategy for businesses – and we can see an increase in this activity, given the less unstable antitrust regulatory expectations of the new American administration. For companies focused on technology, here are three results of recent university research which should inform the decision -making of their managers by considering the possibilities of mergers and acquisitions:

1. Mergers driven by the deployment of consolidation technology. Do mergers stimulate the technological progress of companies? It depends on the reasons for the merger, according to the researchers. A study of mergers in the American telecommunications industry revealed that people motivated by the reasons for consolidating and operating the market have a positive effect on technological deployment in merger companies. On the other hand, the mergers undertaken mainly for financial motivations, which is more often the case, have a harmful effect on the results of technological deployment. Managers who wish to maintain a competitive advantage in technology might want to consider their reasons to pursue a mergers and acquisition strategy.1

2. The possession of non -executive employees influences the decisions of mergers and acquisitions. “Acqui-Hirring” is a common strategy that technological companies use to provide precious talents in their organizations. But it is also common for key employees to leave a company following a merger or acquisition, which can overcome the reason behind the move. This dynamic is that the possession of non -executive employees plays an important role in the target selection process for mergers and high -tech acquisitions. Companies with higher levels of possession of non -executive employees are more likely to be acquired because employees with participation in the newly formed entity are less motivated to leave. In addition, non -executive possession of employees can facilitate smoother integration processes, as employees are more likely to be aligned with the company’s objectives and more willing to support the merger.2

3. Unique technological portfolios make companies attractive acquisition objectives. The probability of acquisition for companies with the least unique technological portfolios is 7%, but it amounts to 20% for those with the most unique technological portfolios. These companies are particularly attractive to close competitors in the same product market segments, since acquiring them can help reduce competitive threats and strengthen market position. In addition, these acquiring companies are better equipped to understand, enhance and integrate the unique technology.3