Major tech companies buy dozens of small targets each year, usually with the goal of adding valuable capabilities that will improve their core business or seed new Engine 2 businesses. It’s to the point that deals costing less than $500 million now represent about 96 percent of all big tech M&A.
Big tech companies now face the dual challenge of realising the deal value in any given capability deal while also building a repeatable, high-velocity integration competency to manage the steady flow of deals coming in at a rate of one every two weeks.
Some companies are surfacing as leaders in this high-stakes challenge of successfully integrating a steady flow of capability acquisitions.
These companies are learning the factors that contribute to deal success. A clear deal thesis and integration thesis grounded in detailed customer and product diligence and aligned with the overall strategy, maniacal focus on retaining all critical talent (not just top leaders), and building a repeatable model with granular tracking of performance to both source and integrate capability deals stand out as priorities for companies ramping up this important type of organic growth.