The speed of change in TME sectors means that companies don’t have the right skills in-house. That’s where acqui-hiring comes in
The acquisition of talent and ideas plays a major role in driving cross-sector M&A. In Reed Smith’s recent report, Wired Up: The convergence of technology, media and entertainment, acquiring innovation, R&D and intellectual property (IP) was one of the key drivers for M&A in the next two years for 70% of respondents.
Making acquisitions to secure talent – or acqui-hiring, as it has become known — is a vital driver for deals. For some of the larger US buyers in particular, small to mid-sized deals are seen as recruitment exercises to acquire staff and intellectual property.
“Start-up and high-growth companies have a really interesting entrepreneurial culture, which I think those larger US behemoths struggle to keep and retain. Part of what they’re trying to do via their acquisitions, is trying to keep that youthful entrepreneurial culture and to keep fresh blood in the organisation,” says Michael Young, Partner at Reed Smith. “I think both the technology and content owners are understanding that they need to be more creative and entrepreneurial in the way they go about things,” says Young.
Acqui-hiring is particularly relevant for tech companies, says US-based Reed Smith Partner William Doran. “The high level of activity is being driven by buyers needing acquire to the skills that they can’t produce or grow internally,” he says.
With the pace of change in the TME sector and the relative scarcity for not only key technologies but key skill sets, buyers need to ensure that they are retaining the right staff or identifying key players who can build their business. Or as Young puts it very succinctly: “Buyers are looking for clever products with clever people.”