While the proliferation of technology research and development (R&D) has enabled contractors to overcome some of the industry’s most persistent challenges, in some areas it has created a crowded field of competition. It has also revealed pockets of attractive market share, product capability, and skilled talent, which has spurred increasing interest for mergers and acquisitions (M&As). When technology companies merge or are acquired, the resulting changes can impact everything from product offerings and customer service to data security and privacy.
This article discusses how M&A can impact contractors, tips for how to predict which technologies are likely to merge or be acquired, and the impact of data migration or consolidation for customers.
Why Construction Technology Companies Pursue M&A
Strategic Advantage
Construction technology M&As create strategic advantages, leverage unique capabilities, or capitalize on synergies. Seeking deals that accelerate growth is common to expand customer base, technology offerings, geographic reach, and gain access to new markets. This can help them stay ahead of the curve and keep pace with the latest advancements in the industry.
Diversification
By expanding their product offerings or entering new markets, companies can reduce their reliance on a single product or market, spreading the risk and creating new opportunities for growth. This can help weather downturns in the market and remain competitive in the long term.
Increased Resources
Increased resources can provide increased financial and human resources, which can be used to improve product development, marketing, and customer support. This can help a company improve its operations, provide better products and services, and enhance the customer experience.
The Customer Impact of M&A
Product Offerings
One of the primary ways that M&As can impact contractors is through changes to the products and services offered. After a merger or acquisition, a tech company may discontinue or phase out certain products or services that were previously offered, or it may combine the offerings of the two companies into a single product or service.
A well-known non-industry example was when Microsoft acquired Nokia’s mobile phone business in 2014. This merger led to the discontinuation of the Nokia brand and some of its mobile phone models. However, when Facebook acquired Oculus VR in 2014, it gained access to virtual reality technology that has been used to develop new products and services for its users.
Pricing & Contracts
M&As can also result in changes to pricing and contracts. Technology companies may change the pricing or terms of contracts for their products and services, which can impact customers. After Google acquired Fitbit in 2019, the company changed the privacy policy for Fitbit users, which led to concerns among customers about data security and privacy.
Customer Support
There are also concerns about the effects on customer support. If a deal leads to staff reductions or changes in the structure of the customer support team, then contractors may experience longer wait times or other disruptions to the support they receive.
Additionally, the acquirer may have a different approach to customer service than the acquired company, and customers may notice a decline in the level of support they receive. Contractors should be aware of any changes to customer support and communicate all issues that may arise to their account representative as quickly as possible.
It is important for companies to communicate with their customers throughout the M&A process and to work to maintain a high level of customer service and support.
Knowing What Happens to Your Data
When a construction technology company is acquired, what happens to the data? The answer: It depends. Various factors including the terms of the acquisition agreement, privacy policy, and data security policies all make up the potential scenarios that can help you prepare for any changes that may occur when M&A takes place.
If the acquirer intends to continue operating the software as status quo, then the data may not be impacted and subject to the same terms and policies. However, if the M&A deal results in data migration or consolidation, then the tech company should provide customers with adequate notice and an opportunity to opt-out or request data deletion.
There are steps contractors can take to mitigate any negative impact. For instance, they can perform a data inventory to understand what data is being stored and where, review privacy policies, and negotiate data security and retention terms in acquisition agreements. It is essential to review the data ownership clauses of software agreements to understand how data is handled in the event of M&A. Contractors may also wish to contact their tech vendors’ customer support or sales teams to ask specific questions about how their data will be handled.
It is crucial for construction technology companies to be transparent with their customers about how data will be handled in the event of an acquisition. Failure to do so can lead to mistrust and frustration among customers, potentially damaging the reputation of the company and affecting future sales.