Irish technology companies need to move towards acquisition-led strategies in order to compete at an international level, an investment expert has said.
Mark Fenelon, director of venture capital firm Whitebridge Capital, warned that Irish tech firms need to upscale their revenues to €100m-plus to compete globally. One of the potential drivers to this is if acquisition led strategies become an integral part of Irish companies.
“This approach is currently not widespread,” said Fenelon. “There is unwarranted skepticism among Irish companies around high failure rates of acquisitions. Recent research has shown that acquisition growth strategies do create superior returns and drive higher exit values if managed correctly.”
Currently Irish firms are struggling to grow beyond €25m, Fenelon remarked.
Leonie Tierney, a senior member of Whitebridge’s US team, said Irish companies need to transition from being software companies that sell products to companies that sell products which happen to be software. Strategic growth planning is critical during this transitional stage, he said, urging managers to look beyond direct sales to achieve real revenue growth.
“It is nearly impossible to grow single product companies into revenues of US$100m-plus,” Tierney remarked. “New products, applications, channels, management teams and sales personnel must be added. Through the right acquisitions you pick up channels, you pick up additional products, you gather engineering and sales resources and you now have a fighting chance of achieving scale.”
These issues will be addressed at a conference on international acquisitions, entitled ‘Creating Scale Through Acquisition’, which will take place on 18 September at the Four Seasons Hotel in Dublin. The conference will focus on technology and life science companies that are looking to overcome scaling issues within the Irish market. Speakers include Google’s head of corporate development Anil Hansjee and Library House’s vice-president of European research Richard Youngman.
By Niall Byrne