Disruption brought on by rapid changes in technology will keep the merger and acquisition wheels rolling. That is one of the clear expectations emanating from Merrill Corporation’s recent webinar, Executing Effective M&A: Opportunities in Technology.
“Today, no one is really immune from technology disruption -- no company, no sector,” said webinar panelist Roger Spitz, head of US West Coast M&A at BNP Paribas. “As the pace of innovation is quickening, companies are more readily outsourcing R&D and innovation to the market through M&A and investment,” he added. “You have traditional companies, which don’t necessarily have software or internet in their DNA having to make sizable acquisitions in technology.”
A pertinent example of such a deal, Spitz noted, is John Deere’s recent purchase of Blue River Technologies, which Deere described as “a leader in applying machine learning to agriculture.” The maker of farm tractors and other heavy equipment said it recognizes the importance of technology to its customers, and “machine learning is an important capability for Deere’s future.” Deere paid $305 million for Blue River. “This is what you’re finding across all the industries, and it does feed M&A because in a way it accelerates the cycle rather than doing everything in-house,” Spitz pointed out.
As companies transform to compete in an increasingly digital world, “they’re gradually morphing into new business models,” supported by M&A or efforts in research and development, Spitz explained. In that process, they are divesting certain legacy businesses or assets, "sometimes pretty sizable," that don’t contribute to their evolving strategy. "So, effectively, you’re having these huge groups selling a lot of non-core activities, and that feeds the market with spin-offs and divestments,” Spitz said.
In addition, some companies investing heavily in areas such as AI and machine learning, “will break through," building enough scale and leadership to where it might be considered as a potential spin-off, with enough size "to maybe live its own life,” Spitz said.
"I do see a major wave of spin-offs, and I do see this feeding the market and M&A deals," he added.
Merrill Corporation helps firms around the globe securely protect, share and collaborate on their most sensitive and confidential content. The company’s signature Merrill DataSite virtual data room uniquely combines state-of-the-art technology with best-in-class service backed by deep industry expertise, ensuring the right information is shared with the right people to produce successful mergers and acquisitions.