There are currently a number of high-profile mergers and acquisitions taking place in the tech sector, including HP acquiring Juniper Networks, Synopsis acquiring Ansys, and Permira’s acquisition of Squarespace.
It’s not surprising, given how competitive the tech sector is. Developing or trying to scale the equivalent of what others have already established a strong market presence with, invariably means working off the back foot. Rather than trying to compete, sometimes a merger or acquisition has greater potential, despite the inherent complexities that accompany them.
Juniper Networks has seen great success with MIST AI, providing companies with greater visibility and easier management of their networks. The easy-to-use interface with AI capabilities is no doubt what attracted HP. It’s one example of how AI remains a major drawcard for investors.
With AI at the forefront of tech development, established companies are all too aware of how newer market entrants can elbow out space for themselves with a successful AI offering – effectively diminishing other’s market share.
One of the tech industry lessons coming out of 2024 was that not all AI investments were paying off. It was a hard wake up call for many companies that believed that AI to their product offerings would gain them a greater competitive edge. Not that this was necessarily the case for HP or others eyeing acquisitions, but it has highlighted the high cost and complexity of AI development. Especially when analysts suggest that the only path forward is renewed commitment and greater investment. This may not be a feasible reality for some companies that lack both the expertise and or funding to continue.
In light of this its no surprise that the volume of mergers and acquisitions is growing, not only among big names but also with smaller industry players. There are many startups driving AI development forward in their own way. Tapping into this innovation rather than try compete with it makes sense, especially if such an opportunity presents itself.
The added benefits of becoming more competitive, having the ability to scale and be able to deliver more customer centric products may drive the excitement of mergers and acquisitions, but it’s the details that can trip up even the most promising deals.
It is challenging aligning business objectives and prioritising customer needs, integrating tech stacks and getting various teams on the same page. Then there’s figuring out how to match expertise so that teams can work collaboratively.
As attractive as they are mergers or acquisitions may be, there is always the potential that mounting complexities could set the businesses back, even impact their customers and brand. Considering that there are many unknowns with mergers and acquisitions, customers could be nervous that they will become less of a priority and that the level of service they’ve enjoyed may not continue.
With clear communications and a focus on maintaining strong relationships, these concerns can be averted. It comes back to aligning priorities and using customer insights to build trust that result in consistent revenue gains.
