June 11, 2013

When the opportunity is right, opt for a technology acquisition

Business owners must not only be able to recognize the right opportunity for an acquisition when it presents itself, but they must also be willing to take advantage of the situation when it does occur.

Sharon Kan is an entrepreneur who most recently ran Tikatok, which was acquired by Barnes & Noble in 2009. In a contribution piece for Inc. Magazine about her acquisition experience, she said she hadn't been planning to sell her company at the time, but when the opportunity presented itself, she saw that it would be a good move in the long-run.

"While many entrepreneurs resist the idea of selling their firm too quickly, there's something to be said for the bandwidth, budget, brand recognition and manpower that a larger business can provide," Kan wrote. "And if you pick the right partner, you'll still be able to think creatively, innovate, and develop your own ideas."

For example, Kan explained that an already established firm could provide a stable consumer base who will be interested in your product. Additionally, larger companies will often have a better marketing budget, which can bode well for the smaller firm. With Tikatok, an application was developed for the NOOK through Barnes & Noble, and it was promoted in all of their stores.

Ted Summe founded Discoverly and also has some experience when it comes to software mergers and acquisitions. In a Tech Crunch contribution piece, Summe explained that there are many important factors to consider during M&A activity, such as location, stack, uptime, the composition of your team and legal matters.

There might be a lot to keep in mind, but when companies can find the right assistance from M&A advisors, an acquisition opportunity can be beneficial in both the short- and long-term.