Target Selection and Evaluation Practices in Innovation-Driven Big Tech M&As: Case Studies from Google and IBM

Abstract

This research investigated the target selection and evaluation practices of Big Tech companies for M&A in the context of acquiring innovation. Using Eisenhardt’s case study method, the case studies of Google's acquisition of Motorola and IBM's acquisition of Red Hat were analyzed and compared through two key perspectives– overall corporate and specific strategic perspective. The study combined primary data collected through semi-structured interviews with M&A specialists from Google and IBM and publicly available secondary data.

The study found that for successful target selection, in the early-stage evaluation, an acquirer needs to consider balancing proactive and reactive strategies, evaluate the target from overall corporate and specific strategic perspectives, and balance an outward-looking approach to identifying high-value targets with an inward-looking assessment of specific internal business needs to efficiently mitigate risks. By employing these practices, acquirers are likely to increase their chances of making successful M&A decisions that contribute to long-term value creation.