Companies are Acquired for Three Primary Reasons

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Companies need to get products to market in order to do what companies are supposed to do … serve a customer1.

Companies exist for one purpose – to serve a customer.
~ Peter Drucker

I previous posts I’ve written about Build, Buy or Partner as Go to Market strategies. In this post I’m focusing on why companies are acquired. The primary reasons companies are acquired are related to speed. It takes a long time to build a company. Much like the decision processes that go into a Build, Buy or Partner strategy a similar calculus is engaged for acquisitions. Buying a company can speed the process of getting to market and to serving the customer.

Once the decision is made to buy, they are acquired for three primary reasons. Usually it’s just one of the three points, but there are times where all three are in play.

 


1.


Intellectual Property

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2.


People

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3.


Customer Base

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Sure there are other reasons companies are acquired. For example:

  • Get rid of a competitor
  • Get out of a lawsuit (or potential lawsuit)
  • Play spoiler (so that others cannot get them)
  • A good guy deal (helping out a buddy). Yes, these even happen within big corporations.

However, the three primary options above are why companies are acquired.

For the most part I have seen Intellectual Property to be the primary driver. However, there are times where the People (usually just one or a few specific people are the targets) and depending upon the intent the Customer Base (the rolodex) can be a significant factor.

Am I wrong? I’d love to hear your thoughts. Also, to hear about examples you’ve seen or experienced from either side of an acquisition.

1. Peter Drucker – The Management Guru on why a company exists.

clip_image002About The Author:
I have spent the last 20 years working in various aspects of the ECM industry. I am currently with Kodak as a Director of Business Development. In my past I have spent time at Kofax, Microsoft, FileNet, K2, and at Captaris (which was acquired by Open Text). Prior to that I was a Unix VAR running my own company. Follow me on Twitter, check my blog, send email or find me on Facebook or LinkedIn.

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