The acquisitions and mergers business is very common in the software industry and it is on high demand. In the first half of 2016, over 170 software deals valued at USD$27 billion. We recently witnessed the acquisition of Yahoo by Verizon for $4.8 billion. Microsoft bought LinkedIn for a whopping $26 billion. We are yet to see how Microsoft will use the millions of professional profiles on LinkedIn to better their products.
These recent events keep small companies thinking on how to trigger growth through acquisitions. When you acquire another company, it fills gaps and cover new growth opportunities hence lead to bigger possibilities in the long-term.
What are the signs that you need to consider M&A? A dip in customer growth is one of the signs. This is a signal that you should expand beyond the current market. The process begins by re-evaluating the products that you are offering.
Always think of your business like a shark. If it is not moving forward, it faces death. Many analysts believe that clients should spend between 1 and 2 per cent of their total revenues. Therefore, if company X’s 2 percent of revenue is Ksh. 10 Million and they are spending Ksh. 2 million on software then you are missing out on Ksh. 8 million. It is upon you to find out how you can capture that amount. If the companies do, it will be a win-win situation.
With mergers and acquisitions, your company will generate more revenue. This is because the new outfit will be able to solve complex problems for your customers. Start the process by talking to the salespersons to understand more about the repeated questions that arise or issues that keep their customers awake at night.
