Top Reasons to Acquire a Tech Company

January 2023

Top Reasons to Acquire a Tech Company

Are you thinking about starting a tech business? Launching a new company is exciting, but the harsh truth is that up to 90% of startups fail. If you’re looking for a less-risky option, acquiring a company could be the perfect solution.

Acquisition entrepreneurship is becoming a popular route to success as a small business owner and M&A deals are expected to skyrocket in 2023. In fact, 72% of tech CEOs in a recent survey said they plan to pursue M&A in the next twelve months.

Why acquire a company?

  • Take control of an established business. Acquiring a tech business allows you to take control of a profitable business with operations and processes already in place. This means you avoid the time-consuming and risky startup stage.
  • Make a profit from day one. It takes most startups around three years to start making a profit. Whereas, the tech companies acquired are generally profitable meaning you can expect to start making money straight away.
  • Access to valuable resources. When you acquire a tech company, you will gain access to valuable resources such as top tech talent, capital, and digital assets.
  • Founders want to sell successful businesses. Many people struggle to understand why a business owner would want to sell a profitable company. The truth is that founders sell successful businesses for many reasons including the desire to travel or retire.

Top 4 reasons to acquire a business

1. Less risk than starting a business

We’ve already mentioned that a high number of new businesses fail. Reducing startup risks is one of the biggest benefits of acquiring a business instead of building a new company from the ground up.

So why buy a company? An acquisition will give you the opportunity to take control of an established tech company where everything is already in place - sales processes, business operations, marketing strategies, customer base, and so on.

You can then inject new ideas and creativity and scale the business to new heights. It’s essentially a fast-track route to becoming the owner of a successful tech business!

2. Join a thriving industry

The UK tech industry is thriving. New figures by the Digital Economy Council reveal that the industry grew by a whopping 1000% between 2010 and 2020 - and it shows no signs of slowing!

When you acquire a tech company, you will join one of the fastest-growing industries in the world with lucrative opportunities for future growth.

3. Access to innovative technology

Technology is advancing rapidly and tech companies have access to innovative new tools and channels. Let’s look at some of the top emerging technologies and trends:

  • Artificial Intelligence (AI): The global AI market was valued at over £112 billion in 2022 and 2022 and is expected to grow by over 13x over the next 8 years. Tech companies can leverage AI tools to improve operational efficiency, make faster business decisions, and gain a competitive advantage.
  • Edge computing: Edge computing was designed to overcome some of the challenges of cloud computing such as latency issues and high costs. Benefits of edge computing include reduced operational costs, enhanced privacy protections, and higher performance. Check out Cloud vs Edge for more info.
  • Virtual Reality (VR): VR is a fast-emerging technology which immerses the user in a simulated environment. VR technology is expected to enter our lives more in the coming years and the VR and AR (Augmented Reality) market is expected to grow at a CAGR of over 63% between 2018 and 2025, according to a report by Valuates.

Suggested reading: Top 18 New Technology Trends for 2023

4. High growth potential

As mentioned, the tech industry is thriving and there is increasing demand for tech services around the world. Innovative new tech creates a lot of excitement and historically generates fantastic returns, even in the early stages.

Looking at the reasons above, it becomes obvious that tech companies have fantastic growth and revenue potential. This is why tech startups are one of the most desirable types of businesses to acquire.

Looking to acquire a tech company?

Finding a high-potential tech startup to acquire can be time-consuming. Luckily, an acquisition marketplace like Foundy can make the process much quicker and smoother. You can join Foundy today and connect with founders who are looking to sell their tech startups.

Get in touch with our experienced team if you would like advice on how to acquire a company or have any questions - we’re always happy to help!

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