One of the reasons we like working with companies such as Nexit Ventures is that they offer a ton of quality material to us that would previously be available for only the selected few. This time, we’ll be taking a closer look at the M&A activity geographically on a more closer level. You should also read our articles in this series Why Being Sold To The US Is A Big Deal and So Who’s Doing The Shopping In The US? The Big Eleven.
Previously we identified the big eleven as companies doing most of the shopping in the US. However, these companies also differ among themselves how and where they acquire their companies from. While these may sound trivial small differences – startups should take notice and understand the activity of each of these buyers.
In the table below, we are able to see firstly, how these companies differ among themselves from a financial view point, but also how they differ in their M&A activity. In total, there are four companies on the list with cash assets exceeding $30 billion and six companies with cash assets exceeding $20 billion. There’s enough powder there to do several larger acquisitions easily.
As we can see, 74% of the acquisitions in general are made from the US or Canada. Only 19% are made from Europe. The Nordic region is on the list with a mere 4% share of acquisitions. I hear people in the crowds murmuring that “yeah, but that’s pretty well for an area our size in population”. True. But do we really want to settle here?
Something the table doesn’t show is the nature of acquisitions as well. According to Nexit, Apple and Google acquire companies somewhat exclusively from the Valley area while Ericsson shops mainly from Sweden and Nokia from pretty much everywhere based on the technology.
There’s another side to this as well, if you look at how these larger companies are run. Most of the acquisitions of Google and Apple are made close to their R&D centers, where as others like Nokia buy based on the technological need.
Now here’s an interesting fact, based on Nexit’s experience. How are these acquisitions initiated in these companies? In Apple and Google they usually follow the organisational structure – top-down meaning “the orders” come from the top. Nokia is more of a dispersed company which acquires companies on a more local level and has empowered their individual offices to look for these talents. Somewhat more of a bottom-up approach in certain ways.
So to summarise, to get acquired by one of the big American companies – you’ll be on their radar much clearly if you’re situated in the US. As for Ericsson and Nokia, you have to have the talent and technology to satisfy local needs (initially).
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Nexit Ventures is a mobile venture capital firm focused on wireless technologies and services. Leveraging its extensive network in the global mobile marketplace, Nexit invests primarily in Nordic and US-based earlystage companies with products and services for a global market. For Nordic mobile companies, Nexit provides a bridge to Silicon Valley markets and exit opportunities.