August 9, 2013

Why an acquisition could be an ideal answer for growth

Sometimes, entrepreneurs have a great idea that could forever change the technology industry. Smaller firms might not always be able to grow that idea into fruition, which is where M&A activity could be the answer.

GreenPages CEO Ron Dupler explained to CRN that his company is on the acquisition trail, but that is because of the changing technology sector. GreenPages is working to improve its Cloud-Management-as-a-Service (CMaaS) offerings. Dupler said that cloud computing is one area in particular that is moving forward quickly, and that the IT market has many companies trying to compete in the hybrid cloud era.

Dupler added that the industry is ever-evolving, and that solution providers understand that they need to migrate their business models to stay successful. Sometimes, firms will lack the financial resources or talent to make that migration, which is at the foundation for a successful technology merger or acquisition. 

"We don't buy to get big," he said. "We buy to add capabilities or to establish new marquee customer relationships. This is not a roll-up. We make moves when it fits in for the strategic building of our business."

This is important for small- to medium-sized technology companies to understand. Often, the firm that is looking to acquire their business is lacking in a particular area, and needs assistance to become stronger. When the two companies are able to work together, the products or services that can be created will have a greater impact.

Technology acquisitions are an opportunity for complementary organizations to find much-needed middle ground. A small business might need financial support, while the purchasing firm could need one more offering to keep it competitive or push it over the edge.