Strategic Investor
Acquiring Tech Companies
What Is a Strategic Investor?
A strategic investor is a company or business that engages in mergers and acquisitions (M&A), i.e., acquiring businesses to further its corporate development objectives.
These objectives may include acquiring a competitor (increasing market share), expanding their product offering or service portfolio (penetrating an adjacent market), penetrating new geographies, enhancing their service platform (including technical), etc. As such, acquiring businesses can be viewed as a strategic investment, allowing the acquiring business to scale via inorganic growth such as acquisitions.
For strategic investors, value creation activities relate to merging the acquired business, achieving economies and optimizations at scale, thereby increasing the business value (i.e., post-merger integration or PMI) and ensuring return on investment (ROI). As a rule, strategic investors do not aim to sell off the acquired business at a later stage (e.g., as opposed to an institutional investor), but there may be exceptions (e.g., carve-outs) in the case of larger corporations.
Strategic Investors Acquiring Tech Companies
These days, every company has a technology component present in one way or another. However, one could make the following distinction:
Core Tech Company
A company that actually builds its own software and/or hardware, and the business of that company revolves around that core technology.
Tech-Enabled Company
A a company that uses enterprise tools and their integration (i.e., enterprise architecture) and sometimes bespoke software to automate and streamline its business processes, thereby increasing cost efficiency, for example.
Tech-enabled companies are also sometimes companies that are not offering software solutions, but have bespoke software solutions powering their business.
In both cases, the tech component is crucial for a strategic investor’s value creation and requires a good understanding by the strategic investor to engage in effective PMI and secure technology ROI. At the same time, the complexity of the applied technology in a company can be daunting.
To ensure a successful tech investment, we provide strategic investors several technology assessment and value creation services.
Technical Early Stage Profiling
Having several companies to approach for a potential acquisition, a strategic investor may want to create early profiles of potential prospects and choose the most promising leads, ensuring that the time-consuming task of evaluating a company comes to a fruitful transaction.
If You Are a Corporate Board Member
As a Corporate Board Member, you represent the shareholders’ interests in the corporation.
You seek
To ensure the corporation stays on the strategic direction and making sure strategic investments are allocated and operationalized adequately
Validate that the corporation is aligned with its growth objectives, including maintaining profitability and scalability
You are challenged by
Ensuring the executive team’s strategy is in accordance with the shareholders' needs
Affirm the executive team is able to accommodate and rectify any mistakes early, and address risks promptly
How Intium Can Help Corporate Board Members & Executives?
At Intium, we’ve developed an evaluation approach standard and built our own software platform to assist our team of highly qualified technical professionals in conducting tech assessments.
Our standard ensures that companies are assessed uniformly, in the same format and according to the same rules, ensuring succinct input to executive teams and corporate boards, ensuring full alignment between boards and executive teams.
If You Are a Chief Executive Officer
The responsibility of the Chief Executive Officer is to grow shareholders’ value.
You are challenged by
Constant data overload, variety, and inconsistency when curating corporate development initiatives, including prospecting, M&A, and PMI
Evaluating value-add opportunities early that align with the shareholders’ long-term requirements
Recognizing specific risks early and on an ongoing basis, tackling issues promptly
Ensuring tech and PMI initiatives are on track and in line with the company's strategy, shareholders’ EBITDA, and revenue expectations
If You Are Head of Corporate Development, Head of M&A
With boots on the ground, you become intimately familiar with prospects and acquired businesses.
You seek
Direct interactions with executive teams for a hands-on approach to evaluating and managing acquisition targets
Providing input for making investment decisions, and ensuring projected ROI and other investment targets are met or exceeded
You are challenged by
Identifying value-add opportunities early that align with the firm’s long-term objectives
Recognizing specific risks early and on an ongoing basis, tackling issues promptly
Having the right tech expertise to aid in strategic planning and execution of the value creation initiatives
Maximizing the investment ROI
How Intium Can Help a Corporate Development Manager?
At Intium, we’ve developed an evaluation approach standard and built our own software platform to assist our team of highly qualified technical professionals in conducting tech assessments.
Our platform is inherently connected to business, describing value creation opportunities and risk through the business lens, e.g., via investments required. Intium’s work products are always geared towards giving you the details necessary for timely actions.