What is the role of mergers and acquisitions in Technological growth? What are the challenges and opportunities ahead?
Mergers and acquisitions (M&A) activity continues to be a key asset for companies looking to accelerate their growth. In Portugal, the activity remains highly exposed to foreign investment, with the technological, financial and real estate and construction sectors leading operations, although the PRR can bring opportunities to other sectors, such as energy (including renewable energies). ), the pharmacist or the infrastructure.
And if the last two years have been quite challenging for the national industry, requiring a significant effort to ensure the resilience of operations, the Technological companies saw this period of disruption as an opportunity for growth, largely due, by the way, to their extraordinary capacity of reaction and speed in redefining strategies.
However, it is important to emphasize that this type of sectoral analysis should not be stagnant, as political and corporate agendas and the dynamics of a global market are also at stake. And we’ve already learned the lesson that whatever is taken for granted today can quickly change tomorrow. Who doesn’t remember the forecasts that, at the beginning of 2020, pointed to a great growth and consolidation of the national economy? The reality, however, turned out to be quite different.
Even so, let’s not forget that the market moves with a very rational analysis of the context and a controlled management of opportunities and risks.
In the particular case of Technological, it is certain that they ended up benefiting from an acceleration of technological processes induced by the pandemic and, of course, from the important role they assume in the digital transition of the national business fabric. But here, having arrived, and grappling with a new context of uncertainty, these companies continue to look to the future and consider M&A activity as a strategic option to accelerate growth, create value and benefit all of their stakeholders?? Incidentally, the players sector are quite optimistic about what is yet to come.
The Future of M&A in Technology and in a New Geopolitical Environment
Disruption, tuning and acceleration has been the rationale of crisis management in Western history. After a pandemic and a war at the gates of Europe, which is expected to be short, the market already anticipates the post-war scenario and the relationships that will be established in the new geopolitical environment.
In this context, it is believed that mergers and acquisitions will increasingly be a driving force in business. at a global levelM&A activity continues to be driven by the willingness to invest in private equity and venture capital. A Nacional levelalthough M&A has retreated in 2021, it is believed that the investment decisions that have been postponed will give the sector a new lease of life, not least because consultants, managers and business leaders know that companies need to become increasingly stronger to have sustained growth and absorb possible new shocks.
Tech Academy: What do the experts say?
It was precisely to debate this issue that the Tech Academy on the 28th of June, promoted a face-to-face session at UPTEC, in Porto.
Pedro Bras Silvaresponsible for the Technology, Media and Telecommunications sectors within the Financial Advisory division of Deloitte Portugal, Antonio TeixeiraCEO of PONTUAL – Software Solutions and Board Member of AETICE, and Jorge Menezesmanagement consultant on the Directive, were the guest speakers, and the debate moderation was in charge of Miguel PintoEditorial Director of the Ekonomista.
Despite the decline in the volume of transactions compared to 2020, great deals were still made in 2021. Jorge Menezes recalls a paradigmatic example: the sale of the Portuguese company Primavera BSS to Oakley Capital Investmentsa venture capital fund that has more than 4 billion euros of assets under management.
M&A: challenges and opportunities
Although in Portugal the M&A activity is very exposed to FDI, Pedro Brás Silva says that the domestic market has also shown its investment capacity, revealing that Northern Europe and the United Kingdom are preferred destinations.
Asked about what are the main concerns of those who buy and what risks they have to mitigate, he says that there is know the asset very well?? identify synergies and ensure that there is a management team capable of optimizing the transition process??
And who’s selling? How do you identify the right moment? In this regard, the speakers are unanimous: the right time is when an entrepreneur feels that he already has structured growth, but he cannot do more alone.
The merger operation may, in this scenario, make sense to leverage the business, underlines António Teixeira. The company may not need financial capital, but talent or other more personalized management models.
At stake is also the future ability to generate business, which is why factors such as ARR (Accounting Rate of Return), MBS and customer acquisition cost are taken into account. In all operations, however, EBIDTA remains a very relevant factor.
At another level, it is also necessary to consider the cultural challenges that an M&A operation can entail: knowing the various dimensions of the target market, the corporate culture and the idiosyncrasies of the customer and user experience It is a differentiating factor for doing business.
After a Q&A session to answer the questions of the company audience[email protected] specialists left a note for the future: the market logic will continue to be one of growth and it is necessary to have confidence and courage to take advantage of the full potential of the reconstruction scenario that lies ahead.