Though Mergers and Acquisitions activity can be affected by many factors — tax reform, current state of the market, and more — a primary driver of M&A is technological advancement. A recent Accenture survey of C-suite executives at large companies showed that nearly a third of those completing M&A deals are traditional companies seeking to acquire digital assets to keep up with disruptive startups.
How does Atlanta stack up? Though Atlanta’s executives were slightly lower than the average when it comes to actually having made acquisitions of digital companies, more of them reported that they were “considering it” in the near future.
The survey spoke to 600 executives in five markets — Atlanta, Boston, Chicago, Dallas/Houston and San Francisco. It focused on how and why companies were acquiring new digital assets, whether they were integrating the new companies fully into their operations, and how they were going about those acquisitions.
Overall, gaining access to new technology, the best technical talent, and innovative processes are all growing as a driver for M&A. Three in four companies said that at least a quarter of their M&A was related to gaining digital capabilities; a third indicated more than half was for that purpose.
Atlanta companies hover close to the average in comparison to other markets in total M&A activity — when one looks at percentage of companies that have completed five or more deals in the past two years, the average is 26 percent with Atlanta clocking in at 25 percent, a negligible difference.
However, Atlanta ranks slightly lower when it comes to acquiring digital companies specifically. Overall, 28 percent of respondents reported acquiring a company for digital capabilities, while Atlanta reported 23 percent.
That may soon change, though. Seventy percent of Atlanta respondents are “considering” an acquisition deal to gain a digital company, a number higher than the average of 60 percent.
Atlanta executives are more likely to leave digital acquisitions as standalone entities (74 percent) compared to the average (67 percent). The Accenture survey cautions against this strategy, as statistics show better integration of digital capabilities into the whole company if the new employees and products are brought into the fold of the larger parent.
And why are Atlanta’s executives acquiring these digital companies? About a third report the need to fill the skills gap; 35 percent report the need to acquire new digital capabilities and the same percentage claim the need for next-generation technology. Thirty-nine percent say the acquisition is conducted in order to transition to new digital services.
