TECHNOLOGY
The pros and cons of mergers and acquisitions While being absorbed by a bigger company can cushion the blow of a tumultuous market and enable smaller brands to launch their offerings in a much wider marketplace , it isn ’ t without its drawbacks . Michael Buckworth , founder of Buckworths – a UK-based law firm that specialises in advising fintechs and other technology businesses on a range of legal and commercial issues – believes M & As can lead to a lack of independence for business founders . As such , these founders can suddenly find that they have restrictions on their budget , strategy and hiring decisions – far in excess of the controls imposed by their previous VC investors .
“ Being bought means being owned by the buyer and , in the case of the founders , effectively becoming an employee of the acquirer . For entrepreneurs used to enjoying extensive freedom to operate , this can be a hard transition .”
A fight for focus can also be a problem for newly acquired businesses , he says , as larger companies can often make multiple purchases that dilutes the attention they spend on each team . “ Once the initial focus on implementation of the acquired business has passed , founders can find that they have to fight to retain the interest of the buyer ' s management . This can lead to disappointment and challenges in growing the business .”
However , the pros of M & A are enticing , mainly because they
“ Often , the strategic priorities of the acquirer change ”
118 July 2022