Technology and IT Services: Sell the Golden Egg but keep the Goose
#PoisedforExit had the privilege of speaking today with an M&A leader and adviser with True North M & A who specializes in transactions for the Technology and IT Services industries. Ed Gehres, a senior adviser, joined us from his office in Las Vegas, NV today to talk about the nuances relating to these industries in merger and acquisition situations. Whether the company plans to grow organically, by acquisition or with outside capital, there are things taken into account that may not apply to other industries. For example, if a firm is growing organically, it can get bogged down with developing stuff that supports their core competencies, which can end up sucking up resources that they can't afford to give up. Growth via outside Capital can go awry as well, if the owners don't share their growth strategies up front. What if the Venture Capital firm has different ideas about how to grow the company? If those ideas are laid out ahead of time, the founders will have better success in finding right-fit investors who align with their strategies. The same can be held for acquisitions of other firms when strategies are misaligned between the companies; integrations tend to fail or take far too long to complete.
Having an M&A strategy that is specific to the Tech and IT industry is essential for short and long term success. Ed said that strategy can't be determined and planned out once, but should be constantly updated. Like any strategic plan, if it's not changing, you're not working it. If you're not working it, then why have one?
Now is the time to prepare and be strategic about your growth plans. Ed said that 2023 will be somewhat challenging for companies in these industries, but as with every recession, the birth of new technology companies will emerge from corporate downsizing. For more of Ed's wisdom, listen to the episode here
Find Ed Gehres here and Julie here
Thank you to this month’s sponsor! Sunbelt Business Advisors and John A Knutson & Co, PLLP, JAK + Co and TrustPoint
Are you ready for your best exit? There is no time like the present to prepare.
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