Why are Industrial Companies Acquiring Tech Startups?
Mergers and acquisitions used to be fairly straightforward in the yesteryears. This is because companies would only make acquisitions within their own industry. This meant that if a technology-based startup were up for grabs, the list of potential suitors would only include companies like Google and Microsoft. This has completely changed now.
Traditional companies like General Electric and Wal-Mart have made several technology-based acquisitions. This has come as a surprise to many people given that these firms do not have the competence required to manage a tech firm. However, the trend is clear.
In fact, in the year 2017, more non-tech firms acquired tech-based startups than the usual big tech firms buying small firms.
In this article, we will have a closer look at some of the reasons behind this increase in inter-industry acquisitions.
Reasons Behind the Increase in Inter-Industry Acquisitions:
These companies have thousands of users. As such, the start-up finds a fixed user base. Also, these companies may refer the startup to other sister companies. As such, the startup gains because of the number of clients as well as the resources allocated to the product increase exponentially.
Disadvantages of Inter-Industry Acquisitions
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