Some 48% of UK businesses making acquisitions said their goal was to gain next-generation technology, while 39% noted they acquired to gain new capabilities.
That’s according to Accenture’s Tech-Led M&A Study, which surveyed over 1,000 C-level executives and also found that the vast majority of firms making digital acquisitions in quick succession were struggling to extract the full value of the deals due to their inability to integrate diverse cultures.
In fact, the data shows that an overwhelming majority (73%) of UK firms kept recent digital acquisitions as standalone businesses – especially those operating within the consumer goods and energy industries. The findings come despite firms recognising that technology (71%) and cultural (62%) integration are critical to deal success.
Overall the research found that digital motivations were increasingly driving M&A transactions, with companies operating in the industrial, travel and health industries being the most active in acquiring digital businesses.
“Our research indicates a positive trend towards businesses bringing in digital technologies and skillsets through acquisitions. Despite Brexit, these smaller deals have been relatively shielded from the wider impact of uncertainty.
“This ‘buy over build’ strategy comes in response to large companies wanting to fight back against new disruptors and accelerate their competitive advantage. But many are struggling to integrate diverse cultures – the ‘secret sauce’ powering digital acquisitions – which is key to companies accelerating change,” said Markus Rimner, managing director, Mergers & Acquisitions Europe lead at Accenture Strategy.
As businesses look to digital deals to remain more competitive in the market, 88% of participants said CIOs needed to have a seat at the table during the early discussions of M&A transactions.
Additionally, the majority (83%) of leaders said they would benefit from digitising the target screening process and using AI. Three quarters (75%) of executives said that companies cannot rely on existing M&A capabilities for digital deals.
“Businesses cannot rely on the ‘same-old-same-old’ approach to M&A when pursuing digital targets. They need a different pre-deal team and evaluation criteria due to the size and makeup of these businesses. Artificial intelligence can help companies accelerate due diligence and ensure acquisition targets are the right fit. CIOs and CTOs need to be brought into acquisition discussions much earlier on than what’s currently happening,” Rimmer concluded.