Tech M&A Secrets & Tips
In this podcast of the Scaling Tech podcast, I dive in with Arin Sime into the world of tech mergers and acquisitions, sharing stories of successful and not-so-successful deals. We focus on the crucial role of engineering managers in navigating acquisition integrations, along with the common challenges that many companies encounter during these periods of change.
KEY INSIGHTS
⚡Engineering leaders can play a vital role during M&A deals.
As the innovators behind the foundational value of tech companies, the engineering leaders’ expertise is pivotal. But what specific roles do they typically assume, and how can they assist during M&A deals? “Engineers are great at creating things, and engineering managers who have had experience over their careers have had a lot of experience developing their roadmaps and listening to customer needs; the thing that they don't have much experience in is corporate transactions. They're not corporate transaction experts. [...] I believe the companies need to start learning, and engineers can help them treat acquisitions as a strategy that a company prepares itself for..”
⚡A stable, consistently high-performing engineering team adds value to tech acquisitions.
The due diligence process largely centers around the engineering team in tech acquisitions. “The other thing that we've always been very focused on when we are interviewing and diligence and engineering team is that we want to see if the team has been together for a while, hasn't had a ton of turnover, and can consistently deliver on time. And that's obviously something that companies care about just internally for internal operations. But I don't think they map that onto how it creates value in an acquisition because if I have to then go and hire a bunch of replacement people because I expect that they're all going to turnover within a year, we all know how hard it is to hire people and then make them work well as a team and also deliver consistently and on time so having that history really adds, I guess, simplicity to the diligence process.”
⚡Tech acquisitions primarily fail due to integration challenges.
Despite what many think, most mergers and acquisitions in the tech space fail due to challenges in integrating the acquired company's technology, culture, processes, and teams into the buyer’s existing business.