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Need to take the emotion out of technology valuations and M&A? Here’s how

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In the US, technology mergers and acquisitions remain the most active M&A sector in terms of value and volume; In the first half of this year, over 1,300 transactions totaled $415.4 billion, according to White & Case’s. M&A Explorer.

Maybe your company’s technology acquisitions aren’t quite on the financial level of Broadcom, which spent $61 billion on VMware. Back in May. However, the importance of these deals, both from a monetary and strategic perspective, means that sentiment can be heightened. And not just for executives on both sides; A 2009 report by China Market Research Group estimates that shareholders are worse off in about 70 percent of M&A transactions, based on hundreds of deals.

Shaun Raine, founder and CEO of China Market Research Group, said, “Too often, companies put together matches that look great on paper but have management and structural issues. Forbes magazine wrote at the time.

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Whether it’s a gap between strategy and execution, a lack of understanding of how the technology fits into your stack, or simple culture clashes, pitfalls, and trap doors abound. Is there a way to navigate this place without getting emotional?

The answer is yes. Among other services it provides Growth Acceleration Partners (GAP)The US-based technology consulting firm enables organizations to evaluate their offerings independent technology assessment. A typical matrix assesses the level of effort (LoE) required to improve specific technologies, from overall architecture to cloud, code, and CI/CD, not to mention security, giving an overall overall score. 10. For example, if a “code test” scores 2 out of 10, a CT score of 9 or 10 would be higher.

“If you can do it yourself, it’s great,” explains Dave Moore, chief innovation officer at GAP. “Most of us don’t have the resources, skills or processes to do that. But do not make such strategic and expensive decisions [an independent assessment] it’s stupid.

“What we find on most of these [deals] Are they not doing well, are they not scoring well,” Moore added. “So people are turning away from their decisions, whether it’s a partnership or an acquisition.”

Assessments can be used for both technology ownership and internal use. The latter is perfect for, for example, a CTO looking to fairly evaluate his company’s stack.

“Remember, our ratings aren’t about, ‘I think you should buy X or not,’—our ratings are about ‘how they score in that category,'” Moore explains. You’ve got everything you need to make up your mind.”

However, prevention is always better than cure, and vendors can save millions. Emotions are often the main inhibitor. Moore joked that a “thumbs-down” rating on a potential tech purchase meant “having to wear a bulletproof vest while walking down the street,” but the customer is now “the happiest in the world.” It’s a win-win; the salesperson is a professional. benefits from expertise, the consultant makes a good first impression and has the opportunity to build a longer-term relationship.

Regarding the technology assessment process, Moore concludes, “There’s a huge risk of getting it wrong.” He advocates Amazon founder Jeff Bezos’s two-step decision-making ethic; On the one hand, the option to go back, and on the other hand, the option you can’t walk back from. These decisions “must be made methodically, cautiously, gradually, and with great deliberation and consultation.” Bezos wrote then.

“So for non-returnable purchases, if you want to do your due diligence and have someone who does that. [assessment]”They know what to look for, and they can do it without your emotions,” Moore added.

For more information on Growth Acceleration Partners, visit www.wearegap.com.

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