In the dynamic and ever-evolving tech realm, the age-old adage “big fish eat little fish” holds true, as M&A remains a dominant force driving innovation and competition among startups, small companies, and tech giants.
The pursuit of innovation and market dominance has led to a significant trend in mergers and acquisitions (M&A) involving big tech companies and their smaller counterparts. The growth of the tech sector has led to a wave of consolidation through mergers and acquisitions (M&A).
For big tech corporations, acquiring smaller tech companies offers opportunities to diversify their portfolios, enter new markets, and gain access to advanced technologies that would take years to develop in-house. More so, big tech corporations are eager to acquire these smaller firms, driven by desire to secure solid financials and tap into a pool of talented human resources.
For example, Google has acquired over 200 companies since its inception, and many of these acquisitions have been of small software companies such as JotSpot which later became Google Sites. Amazon has also acquired hundreds of small software companies over the years. One of these companies is Twitch Interactive, which has since become a famous live-streaming platform for video games. Strategic acquisitions of these software companies helped big tech solidify their position as industry leaders, outpace competitors, and maintain market dominance.
When big tech companies consider acquiring a small software development company, they look for two key things: financial performance and human resources.
Financial performance is important because it indicates the target company’s growth potential and profitability. A strong financial track record increases the value of the acquisition and makes it a more attractive prospect for the acquirer. In 2012, Facebook acquired Instagram for $1 billion. At the time, Instagram was a small photo-sharing app with just 30 million users. The acquisition of Instagram was a major financial success for Facebook. Within a few years, Instagram had grown to over 1 billion users and was generating billions of dollars in revenue.
Human resources are also essential, as small software companies often have talented developers, engineers, and designers. Acquiring these businesses gives the acquirer access to this talent pool, which can help accelerate the development of new products and technologies. The human resources within these companies are invaluable in driving innovation and maintaining the acquirer’s competitive edge.
In 2016, Microsoft acquired GitHub, a code hosting platform, for $7.5 billion. GitHub was a popular destination for software developers to share code and collaborate on projects. This acquisition gave Microsoft access to GitHub’s user base and developer community, which helped Microsoft to improve its own developer tools and services.
The tech industry’s pursuit of small software companies through mergers and acquisitions continues to gain momentum. For big tech companies, these acquisitions present unparalleled opportunities for growth, innovation, and talent acquisition. As a result, small software businesses are increasingly becoming the focal point of interest for major players in the tech space.
When considering a potential sale of their company, small software business owners often seek legal representation. While engaging a law firm is crucial, having a competent and experienced general counsel leading the process is equally vital. The general counsel serves as the central coordinator, overseeing every detail of the transaction and ensuring that all parties involved do not overlook essential aspects that could jeopardize the sale.
The sale of a company involves complex negotiations, contracts, and due diligence, which can be overwhelming for business owners without proper legal guidance. A skilled general counsel possesses the expertise to navigate through the intricacies of the deal and advocate for the best interests of the business owner.
With the right legal guidance and expertise, business owners can leverage this trend to their advantage and achieve their business objectives. Gabriela N. Smith Legal Counsel | Asesora Legal offers the legal experience needed to navigate the complexities of such deals. If you are in need of legal counsel or an international law firm for any business-related matter, take the first step towards a successful future by availing the services of Gabriela N. Smith Legal Counsel | Asesora Legal. Contact us today for a consultation.Contact Us
“ Gabriela is very responsive and goes the extra mile in getting work done timely. Gabriela and her associates are thorough and very organized. We have used them on several small projects relating to organizational documents and letters, but we were also very pleased with a recent sale transaction Gabriela advised us on that took a lot of review and updating in a compressed timeframe. We were successful in getting the sale documents in order, and highly recommend this firm for corporate work. ”
“ When we were looking for an international lawyer in the United States, we were told to reach out to Gabriela Smith. Gabriela very quickly and diligently started working on our international negotiation, and she achieved the outcome we wanted. Working with Gabriela turned a very difficult situation into a simpler deal. We recommend Gabriela. / Cuando buscabamos un abogado internacional en Estados Unidos, nos recomendaron a Gabriela Smith. Gabriela inmediata y diligentemente represento a nuestra empresa en una negociacion internacional y logro el resultado que buscabamos en el caso. Trabajar con Gabriela hizo que una situacion dificil se vuelva en un problema menos para nosotros. We recommend Gabriela. ”
“ We have been working with Gabriela for the last year and she has been really helpful in
helping us coordinate and organize the global structure of our companies and with international compliance matters by being proactive, responsive and fully dedicated. ”
“ I own a minority certified small business and was looking for an attorney who was not only an expert in their field, but also someone who genuinely cared about my small business. I found Gabriela and was thrilled that they represent big and small companies and give them all the attention they deserve. Gabriela helped my business with the first agreements that we signed for some big projects. We are thankful for their commitment to us and recommend their services. ”
“ Gabriela no es un estudio jurídico más. Es un grupo de abogados dinámicos y que realmente entiende sobre negocios y las prioridades de los ejecutivos de empresas. Se hacen parte de la empresa y le ponen sumo interés a los asuntos y al éxito de sus clientes. Gabriela es de confianza y es nuestro abogado de referencia desde hace muchos años.
Gabriela is not just another law firm. It is a group of dynamic lawyers who have a profound understanding of business and of the priorities of seasoned executives. They become a part of the team and pay close attention to the matters they handle and care about client success. We trust Gabriela and they have been our law firm for several years ”
“ Gabriela le suma a su know-how y comprensión de los negocios en Estados Unidos y América Latina, una clara vocación de servicio demostrada en su alta disponibilidad y profesionalismo. Por lo cual interactuar con ella se hace muy sencillo. Recomiendo a Gabriela Smith para asuntos cross-border de alta complejidad.
In addition to her know-how and the added value of understanding business in the United States and Latin America, Gabriela loves to serve her clients, which is something she has demonstrated in her ability to respond quickly and in her professionalism. Thus, it is very easy to interact with her. I recommend Gabriela Smith for complex cross-border matters. ”
“ Gabriela was recommended to us by EHR industry leaders. Gabriela is our go-to attorney for complex software licensing deals and has successfully drafted and negotiated these deals. She is extremely responsive and diligent with our requests and has profound knowledge and understanding of our industry. She takes the time to understand what we need and really cares about our work, products, and services. ”
“ Gabriela es uno de mis proveedores preferidos. La confianza de poder delegar tareas o consultas especificas en un outside counsel sabiendo que todo se va a ejecutar y resolver de manera eficiente, rápida y con un nivel de calidad first class, es fundamental para un área de legales interno. El nivel de personalización en la atención por parte de sus profesionales, y la agilidad para trabajar ajustado a los procesos internos de nuestra compañía ha sido un agregado de valor enorme para las operaciones del área que dirijo. Definitivamente un asset valioso
Gabriela is one of my favorite providers. The trust generated in being able to delegate tasks or specific consultations to an outside counsel knowing that everything will get done and resolved in an efficient and timely manner, and with “first class,” is fundamental for an in-house attorney. The level of personalization in the performance of work by these attorneys, and the agility to work while also adjusting to our company’s internal process has been an added-value to the work I perform. Gabriela is definitely a valuable asset. ”
“ CMP has worked with Gabriela for five years on a variety of corporate legal issues – from acquisition and contract to Human Resource issues. We have always found them to be responsive, professional and provide pragmatic and insightful legal advice. Their legal services are the best I have experienced. I highly recommend Gabriela. ”