Capturing the Real Value in High-Tech Acquisitions

A recent acquisition demonstrates the importance of a literature review for high-tech companies considering acquisition. In 2021, a highly successful corporation acquired a small electronics firm. The Acquiry acquisition was considered a strategic investment as the small company had an attractive business model with very low overhead and a strong cash flow. The acquisition enabled the purchase of substantial improvements to existing products and services at a significant cost savings to the parent company.

Noteworthy technology acquisitions 2021 | Computerworld

The acquisition was seen as a step towards capturing the real value in high-tech acquisitions. A literature review of the acquisition noted that it was the result of extensive due diligence. In fact, the entire due diligence process lasted over two years. During this time, acquisition personnel conducted an enormous amount of research, visited a number of corporations, acquired a number of staff members, performed numerous negotiations, and achieved a number of changes and reforms in order to improve the business. A literature review also noted that the extensive documentation provided to the management team was able to minimize the inherent risks inherent in such a large and complex acquisition.

A literature review of the acquisition also revealed a number of benefits associated with acquisitions of companies specializing in high-technology semiconductors. For one, acquisition executives are able to significantly reduce the time required for finding good candidates for key executive positions. These professionals can search through a great number of available pool of applicants and quickly determine which candidates are most qualified to fill open positions. Another advantage of these highly specialized in mergers and acquisitions is that the selection process eliminates some of the biases that often come into play when a corporation is seeking to hire a new high technology executive. In addition, specific business skills and experience are only required for some executive positions, while others require highly detailed expertise not always possessed by every individual.

The acquisition process also allows acquisition firms to easily overcome certain hurdles associated with mergers and acquisitions that may otherwise prove challenging in other cases. One of the most common obstacles facing high speed innovation firms is the absence of an effective compensation plan or a well thought out incentive program. Some firms may be hesitant to provide incentive incentives if they believe the returns will not be substantial enough to justify the costs associated with the transactions. For these reasons, it is extremely important for acquisition managers to thoroughly evaluate any incentive programs being considered and to carefully review the cost effectiveness of such programs before implementation. In addition, high velocity innovation firms may face certain obstacles to realizing the benefits of their acquisition strategy because of political and regulatory pressures.

In terms of evaluating an acquisition proposal, it is important to review the investment objectives of the acquisition. These goals must be analyzed in light of the current market conditions as well as any significant relationship between the buying firm and its customers or suppliers. For example, a firm may be interested in purchasing a firm with significant expertise in energy efficiency to drive down the cost of its operation while also developing a significant relationship with a local semiconductor foundry. However, an electricity company may prohibit the acquisition of this company unless it offers a substantial incentive to do so. When evaluating acquisition proposals, it is important to ensure that the buyer will not offer something that would create a competitive problem for the acquired firm.

Finally, it is important to address the cash management issues related to acquisitions. Most acquisition activities carry some risk since they involve risks related to cash and credit exposure. However, by utilizing a cash flow statement analysis, any potential problems with short-term financing can be identified early on and can be properly managed. These issues can help ensure the success of acquisitions and mergers without the use of expensive outside financing.