How All These Acquisitions Are Affecting the Technology Industry
Acquisition budgets for technology organizations are going up by the year. There is also increasing awareness about the overall acquisition process, and it is not surprising to see deal numbers reaching heights not seen since the dot-com boom.
At the bottom of the pyramid, a lot of this growth is largely powered by the increased funding startups receive. This includes international funding and market confidence in the potential of global startups.
While all of this activity is welcoming to watch, the acquisition landscape is not always good. It is important to understand there are the bad and ugly sides to it, too—especially when startups begin to focus more on the exit strategy rather than investing time and resources on the core product and the overall vision, as can happen when the market is bullish on technology acquisitions.
Yahoo has been receiving a lot of attention about its bout of acquisitions since Marissa Mayer took over as the CEO. The company has given its reasons for growing, including adding on to its depleted talent pool in areas such as mobile technologies.
On the other end of the spectrum, organizations being acquired need to objectively evaluate the right timing and the match to ensure their growth and vision realization are not going to be impacted. For example, Mark Zuckerberg turned down the offer he had from Yahoo years back, fearing Facebook would suffer a growth constraint. Now, Facebook’s acquisition of the virtual reality venture Oculus VR is being questioned on the same grounds.
The other angle to consider is the peer pressure organizations may face to see who can gobble up the most other companies or who can grow the fastest. While it is important to success to keep growing and changing, organizations should check themselves before embarking in random acquisitions just for the sake of procurement.
Such haphazardness adversely impacts several areas—the acquirer’s financial positioning, the whole setup of the company being acquired (including its culture, people, and vision), and market confidence in the technology industry—which can lead to a bubble similar to the dot-com days, waiting to burst. It is the collective responsibility of all entities to ensure the landscape is competitive yet healthy—and not a disaster waiting to happen.
