Technology M&A Offers Timely Growth Opportunity

MBA (10/6/2008 ) Palaparty, Vijay
Mergers and acquisitions better equip technology companies to stay current and offer market-relevant products and services, according to Jonathan Corr, chief strategy officer at Ellie Mae, Pleasanton, Calif. He says to maintain state-of-the-art, best-of-breed technology, companies can unify, even achieving more security and transparency.
“Strategic mergers and acquisitions make sense,” Corr said. “It means a form of permanent partnership. It takes a lot of work as an owner of a company to maintain technology, but when two companies coming together, there is more communication and ultimately more capabilities in terms of maintenance and even upgradability.”

Ellie Mae, a provider of software and services for the mortgage industry, recently acquired the assets of Online Documents Inc., Concord, Calif., a provider of compliant mortgage documents, from Stewart Lender Services Inc., Houston.

“During this market, some companies will contract while others will gain momentum and establish themselves…pursuing opportunities for growth,” Corr said.

Corr said mergers and acquisitions are strategic in that they allow maintenance of revenue during tougher economic periods as well. "It adds to internal infrastructure and also compliance and operations," Corr said.

From a marketing perspective, Corr acknowledged that existing customers vary from newly acquired customers for both companies. “Adding to the customer numbers is a nice part of mergers and acquisitions,” he said. “It’s not only about integrating personnel, but also new products and services and ultimately, customers.”

“Successful mergers and acquisitions should be transparent without too many changes in operations on the customer front,” Corr said. “It’s difficult to get customers to change because the acquiring company is new.”

Also from a customer perspective, Corr said customers have to believe that their technology partners will survive, and that mergers and acquisitions are an example of “investing in the future.” “The market affects their actions and their pocketbooks," Corr said. "They make decisions based on products and services that are better for them. They have to believe in the survival.”

In terms of rebranding, Corr said maintaining identity is also important for companies. “There is an existing set of customers and an existing product line—it’s a matter of furthering that relationship, between those new customers and new product lines,” he said. “Marketing is developing deeper relationships. Customers need to know and feel that they have all the benefits that they had in the original structure.”

“The most important thing in merging teams is to think of it exactly that way—they are teams," Corr said. "But there is fear, emotions and uncertainty. Have a clear vision and communicate that vision with the team.”

However, Corr said efficiencies and redundancies should be realized early in the process, and that the company should bring everyone together quickly.