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In the era of technology 4.0 with constant change, the level of competition has become fiercer than ever. Many organizations are interested in the Mergers and Acquisitions (M&A) strategy – acquiring or merging with another business to boost strength and improve efficiency. In recent years, the technology industry has garnered increased attention as organizations seek to keep up with the latest trends to enhance competitiveness and market adaptability. In this post, SigLaw will provide additional information about M&A in the technology industry and dive into the key elements to consider when conducting M&A in this sector.
OVERVIEW OF M&A IN THE TECHNOLOGY SECTOR
M&A stands for two words Mergers and Acquisitions. This term refers to the purchase, sale, merger, consolidation, purchase of shares or purchase of assets between two or more businesses. M&A transactions are an optimal choice for organizations looking to immediately reinforce and increase their competitive position in the market.
M&A in the technology sector can take many forms, including:
- Merger of the whole company or part of another company;
- Consolidation with another company to create a new company;
- Acquisition of other companies software or technology products.
WHY ARE BUSINESSES INTERESTED IN TECHNOLOGY M&A?
The technology industry’s growth potential is increasing. According to experts, the M&A industry in general, and the technology sector in particular, will continue to grow substantially in the future, making it a lucrative investment for investors and bringing about resources and development prospects for enterprises.
M&A provides numerous benefits to enterprises, including increasing size and market share, reducing labor expenses, and optimizing financial resources.
M&A activities create opportunities for medium-sized or large-sized enterprises with stable financial and human resources to make significant progress in a short time.
PROMINENT M&A DEALS IN THE TECHNOLOGY SECTOR
Below is a list of the largest technology deals in Vietnam in the period 2021 – 2022:
- Momo e-wallet with a $100 million funding round led by Warburg Pincus in early 2021 and a $200 million funding round led by Mizuho in December 2021;
- Tiki, with a funding round of 258 million USD led by AIA Insurance;
- Sky Mavis with a $152 million funding round led by Andreessen Horowitz;
- Equest successfully raised 100 million USD;
- Start-ups such as Loship, Citics, Sky Mavis, etc., have announced successful fundraising twice in the past year.
HOW TO CARRY OUT M&A IN THE TECHNOLOGY SECTOR EFFECTIVELY?
It is critical for technology firms to strengthen their management capabilities and develop their products. At the same time, long-term collaboration agreements must be considered to accomplish revenue and cost growth while maintaining a solid market position in a setting of limited capital and high fluctuations. Enterprises should restructure and adjust their future strategies. To ensure successful results, technology companies might use professional services to restructure, acquire financing, undertake M&A transactions, and locate strategic partners. Companies must, however, ensure that their employees have the necessary skills and training to use technology efficiently.
This is a beneficial opportunity for investors to buy fintech businesses at reasonable costs and with reasonable options. Since former investors are divested, valuations for fintech companies may be affected. Transition periods can reduce the value of an enterprise. Self-motivated investors can benefit from attractive investment opportunities.
For market institutions, technology companies seek to establish a separate exchange for technology startups, similar to NASDAQ in the US, KOMEX in Korea, or ChiNext in China, which can create a favorable environment for these companies to grow in size and stature. Technology companies have difficulty raising capital by adopting a “growth at all costs” model instead of profitable operations because they are not qualified to become public or listed companies.
For a free comprehensive M&A consultation, please contact:
Siglaw Firm
Head office in Hanoi City: 12A Floor Sao Mai Building, No. 19 Le Van Luong Street, Nhan Chinh Ward, Thanh Xuan District, Hanoi City.
Email: vphn@siglaw.com.vn
Branch in the South: 21 N4 Street, Commercial, Service and Residential Complex at 16/9 Bui Van Ba Street, Tan Thuan Dong Ward, District 7, Ho Chi Minh City.
Central Branch: 177 Trung Nu Vuong Street, Hai Chau District, Danang City
Email: vphcm@siglaw.com.vn
Hotline: 0961 366 238
