Acquiring a Tech Company: A Strategic Game-Changer for Your Business

Acquiring a tech company can be a major game-changer for your business, offering immediate access to innovative technology and skilled talent. While many still believe that building something from scratch is the best route to success in tech, the reality is that up to 90% of startups fail. If you're looking for a less risky option, acquiring an established tech company could be the ideal solution.

By purchasing an established business, you bypass the volatile early stages of a startup and gain access to proven products, a loyal customer base, and a team of experienced professionals. At Foundy, we offer expert M&A advisoryand M&A brokerage services, helping you find your next acquisition and providing step-by-step expert supportthroughout the entire process.

Acquiring a Tech Company: A Strategic Move for Growth

Acquiring a tech company can be a game-changer for your business, giving you access to innovative technology and skilled talent. While many entrepreneurs are drawn to the idea of starting from scratch, the reality is that up to 90% of startups fail. This high failure rate makes buying an established tech company a less risky and often more profitable option. With an acquisition, you bypass the volatile early stages of a startup and gain immediate access to proven products, an experienced team, and a loyal customer base.

Why Acquire a Tech Company?

1. Take Control of an Established Business
   Acquiring a tech business allows you to take the reins of a profitable operation where the groundwork is already in place—sales processes, marketing strategies, and operational infrastructure. This means you avoid the time-consuming and often risky startup phase. As a business owner, you can focus on injecting new ideas and scaling the company to new heights.

2. Make a Profit from Day One
   It takes most startups around three years to become profitable. By acquiring an established company, especially one in the thriving tech sector, you can begin seeing returns immediately. Tech companies with strong financials and a robust customer base offer a more predictable revenue stream, making it a smart investment.

3. Access Valuable Resources
   When you acquire a tech company, you gain access to critical resources, including top tech talent, intellectual property, and digital assets. These are invaluable for staying competitive in the fast-paced tech industry. Whether you're working with an M&A broker, business broker, or M&A advisory firm, acquisitions offer an efficient way to secure these resources without starting from scratch.

4. Founders Often Want to Sell Successful Businesses
   It might seem counterintuitive, but many founders choose to sell highly profitable businesses. Their motivations can range from the desire to travel or retire to wanting to move on to their next venture. This presents a unique opportunity for acquirers to step in and take over a business that is already primed for success.

Top 4 reasons to acquire a tech business business

1. Less risk than starting a business

One of the biggest advantages of acquiring a business is that it significantly reduces the risks associated with launching a startup. The groundwork is already laid—operational systems, customer relationships, and revenue streams are in place. By acquiring, you take control of a company with established processes and inject fresh ideas to scale growth. As a business owner, you also gain step-by-step expert support throughout the acquisition process from M&A brokers or business transfer agents.

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?

Acquiring a tech company is a strategic way to enter a high-growth industry, but finding the right acquisition opportunity can be time-consuming. An acquisition marketplace like Foundy simplifies the process. We have access to over 1.1 million transactions, enabling us to connect you with founders looking to sell high-potential tech businesses. Additionally, Foundy provides M&A advisory services across various industries, helping streamline your acquisition process with an all-in-one portal.

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!

Similarly, if you're in the process of growing your business towards a funding round or an acquisition, clients have repeatedly recommended utilising a portal. It starts with a free business valuation. This will help you and our M&A advisors understand your company's current position and the necessary steps to position yourself for a successful sale. Foundy factors in over 29 key elements that contribute to your business valuation, ensuring a comprehensive and accurate assessment.

Ready to discover your business's value?
Running a business and managing the complexities of buying or selling another can feel like two full-time jobs. While some business owners enjoy handling every detail themselves, many benefit from the sector-specific expertise provided by M&A advisory firms or business transfer agents. That's why Foundy created its advanced portal and Find An Advisor programme, designed to empower you with the education, tools, and expert support needed to navigate the end-to-end process and secure a higher valuation.

Using Foundy’s free valuation calculator on our pricing page, you can instantly see how our services can add six to seven figures in additional share value. Whether you're looking to buy, sell, or grow your business, Foundy is here to assist with every step of your journey.

No matter where you are on your business path, connect with Foundy to access the tools and expert M&A support you need for a smoother, more successful acquisition or sale process. Learn more at Foundy.com.

No matter where you are on your business journey, connect with Foundy to access the resources needed for a smoother acquisition or sale process.