Mergers and acquisitions (M&A) continued at a record pace in 2017, according to a recent article in the Harvard Business Review. The drivers of this pace, technology advancement and globalization, will continue to reshape virtually every industry, often resulting in business consolidations. So, the question then becomes, is consolidation good for a market and customers?
In the rapidly-evolving broadcast space, Grass Valley itself has been through the M&A process many times during its last half century of market leadership. Based on our experience and what we've observed in other markets, we see many benefits for the market resulting from this consolidation. Here are five benefits that are common across today's high-tech industries:
- Improved supplier stability Businesses that acquire other companies do so from a position of financial strength and security, thereby creating a more stable combined business with the resources to endure cyclical market changes. Customers have to worry less about the future of the combined company and can have more confidence when making capital investments.
- Stronger localized service and support When two companies merge, they often combine service and support organizations with different strengths and regional focus. Customers of the combined company benefit from a larger footprint and easier and faster access to the help they need when they need it.
- Higher investment in R&D Every organization has a product vision and an R&D budget dedicated to addressing the challenges and opportunities it sees in the market. When two similar organizations come together, those initiatives are combined into a single comprehensive program. Having the R&D resources of the combined company focused on the same vision results in more agility and flexibility. Customers, always looking for the next technology breakthrough to drive profitability and growth, will gain the advantage of R&D scale.
- Easier purchase and deployment processes The process of making sales and delivering solutions is unique to each individual company, driven by a company culture, resources and leadership. Customers who buy from different suppliers have to navigate those differences, but when two of their suppliers come together, that simplifies the process by streamlining the logistics of purchase and deployment.
- Enhanced interoperability Manufacturers work hard to promote and adhere to established industry standards for interoperability, but sometimes there are small differences between products that require extra effort to integrate. Customers buying solutions from two companies that have merged can rest assured that product compatibility is handled internally, making it easier to plug and play with the products they purchase.
So yes, consolidation does mean change. But it also means opportunity and advancement. Consolidation is a positive force in the market that drives progress in technology and service. Customers can benefit from this progress in their own businesses. As Ben Franklin said, "Without continual growth and progress, such words as improvement, achievement, and success have no meaning."
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