M&A deals in the technology sector are surging across Asia Pacific. Numbers in from Dealogic show that tech M&A accounted for 28% of the total. This equates to deals worth $136.2 billion in 2020 and is more than double the previous year.
This should make many people very happy and a few people very rich.
It is also logical as we head into a more and more digital future that we need scale to succeed. Size is vital if you are to make the margins to improve your products, services and customer care constantly. And expand into new markets quickly.
M&A deals are normally a good thing. In the long term.
In the short term, M&A activity normally brings chaos.
You have almost certainly experienced it. On paper, two companies seem better combined than separate, more competitive and more stable. Or at least that is what the two CEOs think.
Then the trouble, the dark side of the M&A world, kicks in.
Cultures clash. People wonder and worry about their jobs, their departments, and how the focus will change and how much influence they have once the dust has settled.
Then systems start changing, processes are discussed and pored over and the political battles start in earnest.
The last time there was such a flurry of M&A activity, it took years for everything to settle down. In the M&A frenzy, when cable companies were merging daily, conference slides that tried to explain the situation were known as spaghetti slides.
It was chaos.
Customers are affected too. The energy of the organisations involved in the M&A deal turns inwards as the political battles are fought out.
Then as these battles are won, systems across the board are chosen, then changed. Then comes the integration process. And more stress, worry and late-night pizzas in the office.
So, while you may read of the surge in M&A activity and think ‘ah good,’ take a moment. What it will probably mean is chaos and a worsening customer experience for a year, maybe more.
Let us hope it is worth it in the long run.