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Consolidation among New Technological Corporations

Rather than acquire an incomplete product or one with little market testing, a New Technological Corporation may look at its cash hoard and market capitalisation and go looking for companies like itself, already on their growth curve, but small enough to acquire and digest. Conversely, one day management may awake to discover that they are being approached with an acquisition offer from a New Technological Corporation senior to them in the financial world. Do such deals make sense? What happens when you put two New Technological Corporations together? You get...a bigger one. Since all New Technological Corporations will tend to have the same shape, the numbers are likely to be proportionately the same, and therefore it is unlikely that the shape of one company will differ much from another.

To determine whether an acquisition makes sense, then, the companies must look beyond the aggregates to the events. If one company brings the other access to distribution (such as a network of skilled dealers, local sales offices, or a major account sales force), technology applicable to the other company's product line (for example, a personal computer database company buying a company specialising in micro to mainframe links), or market dominance in another niche (a PC word processing leader buying the maker of the most popular Macintosh word processing program), then the acquisition can be evaluated simply by studying the technological leverage of the combined companies.

Because New Technological Corporations depend so heavily upon Wild Talents, successful consolidations among them will tend to be friendly mergers. A hostile takeover that results in loss of the Wild Talents responsible for the success of the takeover target will very likely be a Pyrrhic victory for the acquirer.

Editor: John Walker