M&A deals that are made for the purpose of acquiring new technology can make or break a company. At worst, a disastrous deal leads to wasted effort and dollars, often in the millions or even billions. On the flip side, a strategic transaction can catapult a company into first-mover position, give a speed to market advantage over rivals, and potentially let a larger company run away with a new market. Take Google’s purchase of YouTube, now a multibillion-dollar revenue stream that’s fueling the disruption of cable, or Facebook buying Instagram, which solidified its social media dominance.
3 Common M&A Pitfalls, and How to Avoid Them
An effective M&A deal can be incredibly valuable, helping both parties to develop a competitive advantage and enter new markets. But these deals can be tricky to pull off — and failure can be catastrophic. In this piece, the author offers three tips to help business leaders avoid some of the most common pitfalls that can spoil an otherwise well-conceived merger or acquisition: First, make sure you’re buying the core underlying technology (and the full rights to it), not just the company licensing the technology. Second, communicate with all shareholders, not just those with a large stake. Finally, don’t underestimate the value of chemistry and culture. A successful M&A deal is no easy feat — but these three tips can keep you from making some of the most common errors.