Mergers and acquisitions are a big deal for SMEs. It can change the whole outlook of a small company. But when is the right time to make changes? Four experts share their viewpoints, starting with Paul DeMott, Chief Technology Officer of Helium SEO.
For M&A decisions the most significant indicator to proceed with the purchase is achieving faster outcomes compared to maintaining maximum control and strategically creating internal solutions becomes too slow.
Speed takes precedence for me since I normally choose to build rather than acquire. Within my software engineering discipline writing code and mastering the entire stack remains an internalised perspective. At Helium SEO rapid expansion reaches a point where the best internal team cannot fulfil both growth goals and market requirement changes. Acquisitions become the ideal solution in such cases.
The acquisition of a development agency specialising in marketing automation tools happened at Helium recently. Our company had intended to build its own platform enhancement capabilities from scratch. We had drawn an initial design which then moved into scoping before kicking off our first development sprints. A few months showed that the necessary feature set could not materialise without reallocating resources from our core projects. The sales team held onto opportunities which needed those particular features our development had not yet completed.
We conducted external investigations until we located a small agile team implementing the identical solution we needed for our problem. The solutions and organisational values between the two businesses were compatible. We integrated the acquired services rapidly which allowed us to provide new solutions to our clients in just weeks. We completed the deal which reduced our project schedule by nine months. The goal extended beyond acquiring new technology because we needed faster project completion combined with reduced delays.
We conducted external investigations until we located a small agile team implementing the identical solution we needed for our problem. The solutions and organisational values between the two businesses were compatible. We integrated the acquired services rapidly which allowed us to provide new solutions to our clients in just weeks. We completed the deal which reduced our project schedule by nine months. The goal extended beyond acquiring new technology because we needed faster project completion combined with reduced delays.
George Holmes, Managing Director, Aurora Capital:
Mergers and acquisitions can be a fast route to growth, opening new markets or bringing in fresh talent and capabilities. However, they’re never a one-size-fits-all solution. Deciding whether to build or buy comes down to what makes the most sense for your business, what you can afford and how much risk you’re comfortable taking.
Acquisition tends to make sense when time is a limiting factor. If you’re trying to break into a new sector or geography, or quickly gain skills and capabilities your business lacks, buying an established company can be more efficient than building those things from scratch.
The same applies to acquiring customer bases or intellectual property, both of which can take years to build naturally. But these benefits only materialise when the acquisition is planned, properly financed and followed by a well-managed integration process. Rushed deals are rarely successful.
Building organically can be the better route if your business has the time, cash flow and internal talent to scale sustainably. It gives more control over culture, brand identity and operational structure. For small businesses in particular, building is typically more financially manageable, avoiding the need for external debt or investor dilution. However, it may also mean slower progress or missed opportunities if competitors are moving faster through acquisition.
In reality, the decision often comes down to financial readiness. An acquisition typically requires serious upfront capital, strong cash flow forecasts and contingency planning. Many SMEs underestimate the capital needed after an acquisition for things like onboarding staff, upgrading systems or supporting customer transition.
That’s why access to finance is so important when considering M&A. We always advise businesses to have their house in order before they embark on an acquisition. It’s important that you ensure financials are up-to-date, identify any funding gaps and explore a full range of finance options, from traditional lenders to alternative providers which understand acquisition funding.
Another important consideration when weighing up buy vs build is market timing. In a volatile economic environment, valuations may be lower, but so too is appetite for risk. If interest rates are high or borrowing is expensive, it may be a sensible time to focus on organic growth. Conversely, if the business is in a strong financial position and a strategic opportunity presents itself, holding back could mean missing out.
As with so many big business decisions, there is an element of risk involved. Ultimately, whether you buy or build, what matters is having a clear plan and managing your finances carefully. Acquisitions can be a fast track to growth, but only if you have the right funding, strong leadership and a clear integration plan. Growth is essential, but it only happens when it’s stable and manageable.
Glen Williams, CEO, Cyberfort:
Mergers and acquisitions (M&A) are strategic moves that organisations undertake to enhance their market position, expand their capabilities or achieve growth. In the technology sector, mergers can be particularly impactful due to the rapid pace of innovation and the competitive landscape. If successful they can result in accelerated growth, improved financial performance and the opportunity to expand further into existing markets and access to opportunities in new target markets. However, if they do not achieve the expected results, organisations which adopt this strategy could find themselves facing integration issues, regulatory hurdles which can take time to resolve and dilution of focus on the core business if things do not go to plan.
From my experience in the technology sector the approach to mergers involves four key steps:
1. Strategic planning – Companies must identify their long-term goals and how a merger aligns with these goals
2. Target identification – Finding the right company to merge with is crucial. This involves thorough research and due diligence
3. Integration planning – Post-merger integration is critical to realising the benefits of the merger
4. Ongoing cultural integration – Once the merger plan has been implemented, you then need to continuously monitor that a ‘one company culture’ has been adopted
For technology businesses, deciding whether to buy (acquire) or build (develop internally) is a pivotal decision that can significantly impact their growth trajectory. Here are some considerations to help determine the right approach:
When to Buy
1. Speed to market – Acquiring an existing company can be faster than developing new technology from scratch
2. Access to expertise – Buying a company can provide immediate access to specialised knowledge and skills that may be difficult to develop internally
3. Market position – Acquisitions can help quickly enhance market position by eliminating competitors or gaining access to established customer bases
4. Risk mitigation – Developing new technology internally can be risky and uncertain. Acquiring a company with proven technology can reduce development risks and provide a more predictable path to success
When to build
1. Control and customisation – Building technology internally allows for greater control over the development process and customisation to meet specific business needs
2. Cost considerations – While acquisitions can be expensive, building internally might be more cost-effective in the long run
3. Cultural fit – Integrating an acquired company can be challenging due to differences in corporate culture. Building internally avoids these integration issues
4. Innovation and IP – Developing technology internally can foster innovation and result in proprietary intellectual property that provides a competitive advantage
The decision to buy or build in the technology sector depends on various factors, including strategic goals, market conditions, available resources and risk tolerance. Companies must carefully evaluate their options, considering both the immediate and long-term implications of their choice.
Tracie Crites, Chief Marketing Officer, HEAVY Equipment Appraisal:
Over the years, I’ve worked with businesses of all sizes, guiding them through strategic decisions, including mergers and acquisitions (M&A). The decision of whether to buy or build is a critical one for any SME, and it all comes down to timing, resources and long-term goals. For small to medium enterprises, understanding when to pursue an acquisition versus building from the ground up can make a huge difference in scalability, market positioning and cost-effectiveness.
When exactly should one make their purchase? Business acquisition provides the best solution for speedy expansion together with brand dominance and technologies which internal development takes too much time. When you want to penetrate a new market swiftly you can save time and money by acquiring an established firm that already has customers and distribution channels in place. Businesses acquire businesses to enter new markets according to a recent Deloitte study with 64% of companies making business acquisitions for this purpose. By purchasing intellectual property (IP) or skilled personnel, businesses can quickly get ahead of competitors without waiting through years of organic expansion.
The development process of original products through sustained R&D efforts and appropriate market timing becomes a superior choice for lasting growth when your business demonstrates financial capabilities to support both initiatives. Your organisation maintains better control of the development process when you build your solutions from within while achieving enhanced team cultural alignment. Building your own solution proves to be the optimal choice for companies that innovate within secluded markets. Build your own solution because it offers strong versatility for companies with adaptive capabilities.
Smoothing transitions is a major obstacle which companies face with acquisitions. The majority of company acquisitions results in failures because organisations implement substandard integration strategies that lead to culture mismatch problems, leadership transition issues and technology compatibility problems. Companies need to evaluate how well new acquisitions match their future needs in addition to acquiring immediate market position and technological advantages.
Small and medium enterprises find success through combining internal growth along with strategic acquisitions. Build capabilities at your core before exploring acquisitions to solve value chain gaps and capture new markets and accelerate operational growth. Your competitive advantage will benefit from an acquisition when your industry demands rapid evolution or when you need cutting-edge technology.
Businesses need to base their acquisition or development decisions on their strategic requirements along with market demands and resource constraints and long-term valuable impact. Devote sufficient time to evaluate each option carefully before you assess how they match up with your business’s future plans.
