I am intrigued when I see a company in a traditional industry, acquire some kind of digital or information technology business. It’s a very modern M&A sub-trend I’ll call “techquisitioning”. We did not see much of it during the original dot com and e-business boom of the early 2000’s. However, there are many more interesting entities out there to be considered today – some quite mature and ready to pick. Here are some recent examples:
- Capital One acquires user experience consultancy Adaptive Path
- Under Armour Buying MapMyFitness in $150 Million Deal
- Monsanto Buys Weather Big Data Company Climate Corporation
- Wal-Mart acquisition to bring new tech to stores
- Kroger Agrees to Buy Online Vitamin Seller Vitacost
- BBVA buys US digital bank Simple to increase online offering
I think some of the smartest traditional industry business leaders have rather suddenly woken up to the digital threats on the horizon in the post-recession new normal. Companies like Google, Amazon, Facebook and Alibaba have used digital era technology to amass a great deal of market power which they can use to either enter or pressure multiple industries. After a decade of relative under-investment in technology, catching up or leapfrogging isn’t easy for the traditional incumbents. Organic capability development is slow. So sometimes, jump-starting your future by acquiring a technology, online property, platform or talent team might make sense.
Let’s imagine for a moment that this is a good idea and it works (we cannot know yet, it’s too soon to tell). The early movers have started- what are you going to do? Do you have the management team competency to find and evaluate potential targets? If so, do you have the funds and the investor tolerance to make your own fast follower moves? Finally – could you integrate such delicate and culturally disparate entities without crushing them? These are questions I think many boards of directors will be debating with their CEOs over the next couple of years. CIOs should be ready to help the leadership team develop answers.