The market value of top technical companies is almost five times greater than that of the top traditional companies in other industries. Paul Cuatrecasas argues that this market value represents the true power technical companies have in today’s economy, which gives them the flexibility they need to adapt to emerging trends. Legacy industries must ready themselves as technology encroaches on their core operations. Drawing on his extensive experience with mergers and acquisitions, Cuatrecasas adeptly outlines steps executives must take to acquire, and transform into, technology companies.
Technology drives today’s markets, and traditional industry players need to take notice.
Retailer Walmart bought e-commerce company Jet.com in 2016 to enhance its position in e-commerce, digital marketing and delivery. Executives at the mega-retailer realized that to compete with disrupters like Amazon, Walmart had to become a technology company. By purchasing Jet.com, Walmart not only acquired tech-savvy talent, but established itself as an innovative technology company. Walmart continues to adapt its technology strategy, acquiring technology companies as well as innovating internally to service its customers.
Executives in other sectors, including banks and automakers, understand that they need to transform their businesses to survive. The new disrupters, technology companies, with their rapid advancements in areas such as artificial intelligence (AI), nanotechnology, blockchain and autonomous vehicles, are upending business as usual. Companies that don’t adapt to these developments will likely fail. To stay competitive, traditional businesses must not just become technologically savvy, but must transform into technology companies.
Paul Cuatrecasas is founder and CEO of Aquaa Partners, an investment banking firm based in London. Paul advises companies on technical mergers and acquisitions, and, over the past 28 years, has completed over 45 M&A transactions worth more than $10 billion.