Although war The tech sector still sees M&A in the United States, with accelerating inflation and rising interest rates in Ukraine. In the year Big tech M&A deals in the first half of 2022 include Microsoft’s acquisition of Activision Blizzard for $69 billion, Google’s purchase of Mandiant for $5.4 billion, and Elon Musk’s sale to Twitter for $44 billion.
Private equity has also been active in the technology sector, with Thomas Bravo buying SailPoint for $6.9 billion and Vista Equity Partners buying Citrix for $13 billion. Cross-border technology M&A included Deutsche Telekom’s deal with SoftBank Group and T-Mobile US for $2.4 billion, and Siemens’ deal to acquire Brightly Software for $1.8 billion.
European and Asian companies can compete effectively with both US companies and private equity by offering greater post-transaction target management responsibility, flexible transaction structures, and distribution of target products sold with the buyer’s sales team. By understanding the key issues in cross-border technology M&A, an international owner can close a successful transaction and achieve its business objectives in the United States.
Purchase requirements
Management teams, boards and shareholders have had time to adjust to the decline in valuations and will be more amenable to buying at reasonable prices.
Before approaching targets, it is important to develop detailed purchase criteria.
Acquisition criteria may include subsector, product mix, revenue, profitability, and customer profile. It should also include more intangible aspects such as vision, culture and strategy. The strength of the management team is also important, especially if the global buyer is following the private equity playbook and acquires a platform company with the intention of acquiring smaller additional companies later. Finally, practical considerations such as geographic location – if the international buyer is in Paris, a flight to the East Coast is much cheaper than a flight to California.
Target research
Once purchase criteria are established, thorough target research is required. This research should include target financing, capital structure, management and industry reputation. Research should include databases such as Capital IQ, PitchBook and Crunchbase, as well as confidential discussions with industry leaders from other companies in the subsector and industry trade groups. This industry insider knowledge can be very powerful.
