Last Updated 12 May 2020

Things Big Companies Look for When Buying Your Startup

Category Start up
Essay type Research
Words 678 (2 pages)
Views 339

Introduction

After successfully launching a business and successfully maintaining that company, many business owners look for another BIG challenge; often that means purchasing another organization. Acquiring another company is a common business practice. However, when considering such acquisition, a lot of research is conducted, long before the deal-making process. Fortunately, in recent years, the economy has been steadily gaining traction in a positive direction and more and more companies are following this trend.

2017 is recorded as being a groundbreaking year for business acquisition across the world. Over the last decade years, there have been half a million such deals brokered. A tenth of those deals was done last year. 2018 is also forecasted as being another record-setting year and is expected to see more than 3 trillion dollars changing hands.

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There are several factors that have created the ideal business environment for business acquisition; they are globalization, technology, and increased competition as well as increased talent. Many of those companies who acquire new businesses are not necessarily looking to swallow up whole companies and wipe them from existence. No! What they have done is improved upon the business model, which already exists.

For example, Facebook has done a number of these acquisitions; one of which was purchasing the popular messenger application, WhatsApp. If you have followed the tech news over the years, you would have become familiar with WhatsApp. Since its launch, it has steadily gained popularity worldwide. People opted to use the application, rather than make expensive phone calls; it seemed like a mirror of a social media platform itself. This generally even threatens the viability of local telecommunications companies. Therefore it made sense for Facebook to acquire them, seeing as they had more than a billion online users and were the top social media platform for online users.

In addition, Facebook used this strategy, to fit themselves into another niche area. They just took a shortcut. Rather than recreate the wheel, they bought a pre-existing one and are working to improve upon it. This is a great business strategy because it minimizes their investment when compared to having to build an identical application to WhatsApp.

Amazon follows a similar approach. They have been causing figurative heart palpitations right across the Western Hemisphere, especially as Wal-Mart, because they are looking to dominate the local and national wholesale industry. They have examined the model of companies like Wal-Mart and are using their online model to make purchasing food and other goods much simpler. Imagine not having to comb through isles, to find ingredients needed to cook dinner.

In the cases identified above, they are easily swallowing up the top currency in business and that is talent, followed by technology. WhatsApp has shown the talent of taking over, in many countries across the world; they have quickly dominated their industry. This takes savvy business strategies. They are endowed with a team that has a skill set, a recognizable brand, and an outstanding technological framework; all of this would not only be coveted by their competitors but would also threaten the viability of their competitors, to remain long-term in the market. Therefore the business acquisition was logical and sound.

Microsoft came out of the dark ages and purchased LinkedIn. They foresaw the changes, which were rapidly on the horizon and spent over twenty-six billion dollars to acquire the social media platform, geared towards professionals. Not to be left behind, Google another trendsetter business brand acquired YouTube. This made sense because more than 80% of the content consumed online, are video files.  Millions of video files are also uploaded to the platform each day. Google already dominates the search engine market, and their name is now synonymous with using the search engine. They are keeping with the trend of acquiring equally successful assets that can multiply their profits in the short term.

It is important to note that these deals, allowed for the acquired company to keep its individuality and to operate under the same brand that its users were familiar with. They are simply using the technology, talent, and other successful resources to further support their own growing business

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Things Big Companies Look for When Buying Your Startup. (2018, Sep 20). Retrieved from https://phdessay.com/things-big-companies-look-for-when-buying-your-startup/

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