Mergers and acquisitions are a reality in the technology world and one that most startups and small businesses have to confront at some point. One of the key questions your organisation will no doubt ask itself if approached for a buy-out or capital injection is: “Am I going to get the best value for my business in the current climate?” Similarly, large enterprises need to consider whether they’re getting the most bang for their buck or punch for their pound when mulling an acquisition. So what does the landscape look like in 2016?
In the past, the tech world has experienced ‘boom-and-bust’ economic cycles – think the bursting of the dot-com bubble in the late-90s, or the impact of the pan-European recession from as early as 2007. Can we realistically predict the next financial crisis? Maybe we don’t have to. According to some experts, the boom-and-bust cycle isn’t as relevant to businesses as it once was.
Speaking at the 2016 Net Events EMEA Press and Analyst Summit in Rome, TechPulse 360 commentator Jean-Baptiste Su said that Silicon Valley and other tech hubs were moving away from such clearly defined highs and lows. Instead, he posited that the industry was now “bi-polar”, citing the contrasting fortunes of two of the most successful startups in recent times, Uber and Dropbox.
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“It’s boom and bust at the same time…it’s bi-polar, it’s schizophrenic. On the one hand, you have Uber, the largest startup ever with a $60 billion valuation. Other unicorns? Their valuations are falling like a rock, like Dropbox. The question now? Is the tech bubble exploding, is Silicon Valley going to disappear?”
We wouldn’t bet the manor on that, and neither would Su. But how will this new economic reality impact tech companies going forward? According to him, the current landscape makes 2016 a particularly ripe year for M&As, especially when it comes to emerging technologies like the Internet of Things and Artificial Intelligence.
“What’s going to happen this year in Silicon Valley is valuations are coming down and it’s a great opportunity to buy technologies and startups at a discount. [It’s] a great M&A year for all those technologies – IoT, but also AI, self-driving cars, drones, and VR.”
No less than Apple’s Tim Cook agrees. At a recent shareholder’s meeting, he noted that, “In times where equity values are falling, there’s even more opportunity to do that” and the Cupertino-based company has already snapped up three companies this year, including facial recognition firm Emotient.
In other words, if your business has a pot of cash to play with, look to future rather than established technologies for the best long-term value – we’d add that 3D printing is another area primed for growth in the enterprise.
What else should we be keeping an eye on 2016 and beyond? Let us know by leaving a comment below.
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