April 16, 2015

When acquisitions remove open-source technology from the market

Tech acquisitions can have a ripple effect that disrupts other companies in the industry. In a recent Wired Magazine post called "What Happens When Apple Buys a Company You Depend On," Klint Finley explains how high-profile acquisitions can leave prior business partners scrambling. 

Large companies like Apple and Facebook often purchase smaller firms with the plan to gain exclusive use of their platforms. Whether it's a particularly useful set of patents or an existing technology, the acquisition strategy is aimed at cornering the market on a particular service or solution. 

Recently, Apple is reported to have purchased a database company called FoundationDB, leaving current users of the platform uncertain about their ability to continue relying on it in the future. 

"FoundationDB's story isn't a new one," explains Finley. "Instead, it's yet another a cautionary tale about putting too much faith in unproven companies offering proprietary software that could go away at any time—especially when a behemoth like Apple swoops in to buy it up."

In the tech industry ecosystem, the occasional disappearance of technology from the marketplace creates a void that some other startup can grow to fill. While the temporary setback and migration to a different platform can cause inconvenience to companies on the periphery of an acquisition, it's a natural consequence to signing an exclusive deal. Finley also suggests that companies on the cusp of such a deal perform due diligence to alert users of the impending change. 

Contact us today to learn more about how an experienced M&A advisor can help your tech company reach its mergers and acquisitions objectives. With the guidance of a qualified professional, your company can pursue a deal that helps achieve its long-term growth goals.