Technology acquisition can be an effective strategy for companies to improve their competitive advantage. By acquiring new technologies, businesses can develop innovative products or services that meet the changing needs of customers. It is important to follow the best practices in pursuing an acquisition of technology. These include conducting thorough due diligence, and creating an effective plan for integration.
1. Identifying the Right Technology
The biggest hurdle in technology acquisition is to figure out the technology that will benefit your business the most. This requires a deep understanding of your company’s objectives and requirements. Once you have this information you can begin to look into and evaluate different technologies. You should also consider the method of purchasing technology including licensing, joint ventures, acquisitions, or alliances depending on the amount of control and ownership you would like over the technology you have acquired.
2. Expanding market reach
By acquiring technology companies can gain access to new markets by making use of the technology or products of acquired companies. Google’s acquisition by Nest Labs, for example has given the company an advantage in the expanding market of smart home automation systems. Another instance is the acquisition by Facebook of Instagram, which enhanced the social networking and photo-sharing capabilities of the platform.
3. Enhancing Core Capabilities
Innovation is crucial for profitability and growth but can be expensive and time-consuming. Acquisition of technology can be an effective method for non-technological companies to stay ahead of competitors by having access to new technologies that they may not have been able to afford.
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