While some aspects of corporate activities are being simplified, overall new technologies may be adding to the growing list of complexities for TMT corporations. And with many traditional leaders losing ground to agile upstarts, the stakes are only getting higher. Baker McKenzie’s Adrian Lawrence and Anne Petterd discuss actionable approaches TMT corporations can take to stay ahead.
There is no magic formula for innovation, but to drive change within their organizations, TMT corporations need to find the right leaders for the job. Ideal candidates will be a hybrid of an entrepreneur and a politician, willing to take calculated risks and experiment. At the same time, they need to have the capacity to tread carefully on the internal dynamics of a corporation and implement a culture of compliance toward local regulatory regimes.
Conversations with governments and policymakers on a constant basis are critical for TMT corporations pursuing growth via expansion into new markets. However, not all companies have a public affairs representative or team located in every jurisdiction, and it may be difficult for small tech companies to find out how to engage with regulators. To overcome this barrier, many companies are reaching out through chambers of commerce, as well as partnerships with industry groups that have more resources and a stronger voice.
The starting point in tech M&A is for corporations to question what they are trying to achieve: Is it to acquire new products or gain access to new markets, or even to acquire talent and management teams or specific assets (data, IP or a division of the target company)? Asking these questions helps acquirers to start with the commercial piece of the puzzle, which directs focus on the core business case, and whether it is viable from a financing, competition and profitability standpoint. This then evolves to the legal analysis to see if the building blocks are really in place, and asks whether what is being sold can truly be delivered.
To mitigate risks, acquirers need to conduct thorough due diligence to find out whether a target company truly has IP rights and control of the technology it is offering. It also allows buyers to see whether the target company is really a good cultural fit. Deals have been known to collapse when traditional businesses try to impose their culture on agile upstarts.
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