This article is based on a panel discussion held at Citi Commercial Bank’s EMEA Digital Leaders Summit 2023 held in Prague in September. Comments have been edited for brevity and clarity. Scaling up a company from a startup is exciting but presents numerous challenges. Baris Tezcan, Head of Citi Commercial Bank in Central Europe, talks to two business leaders about achieving goals. Successfully scaling a startup requires a combination of strategic planning, resource allocation, adaptability and investment in infrastructure and talent. It is also important to maintain the qualities that made your business successful in the first place. Growth is a dynamic process that often involves overcoming numerous obstacles along the way. Planning – combined with flexibility – pays off “When we launched in 2010, e-commerce was either facilitated by post offices or international logistics brands with limited domestic operations,” recalls Simona Kijonková, Founder and CEO of global logistics and e-commerce platform Packeta. Kijonková spotted a gap for domestic carrier networks that could connect brick and mortar shops and was able to grow very rapidly. “The key to successfully scaling was a constant focus on execution,” she says. Packeta now has more than 2,200 employees in eight countries. In the context of scaling a company, execution is the process of implementing the strategies, plans, and actions necessary to achieve growth and expansion goals. It is the practical and operational side of scaling, where you translate your vision and strategic decisions into tangible results. Execution is a critical component of the scaling process because even the best-laid plans can fail without proper implementation. Susan Repo, CFO at ICEYE, an earth observation data and solutions service provider that uses commercial satellites to provide space imagery to governments, insurance companies and other organisations, says that during rapid expansion, it can be tough not to get distracted. “Over the past two years, we have grown from 200 to 600 people. To do that successfully, we have had to keep our heads down and concentrate on execution and operations.” Having a clear strategic plan is essential if growth is to deliver the anticipated results. Your plan must include not only operational targets but also identification and assessment of financial, operational and compliance risks. “The importance of change management in relation to governance and legal matters is often underestimated,” says Repo. At the same time, adaptability is also important. “In my previous role at Tesla, the mission of the company was significantly expanded from electrification of transport to becoming a leading sustainable energy provider when SolarCity was acquired in 2016,” recalls Repo. “The strategic goals of the company evolved given the expansion into a different business segment. But the overall objective remained operational excellence to facilitate rapid scaling.” Getting the details right What might seem like unimportant minutiae in a small company can become major headaches in a large firm. For instance, in a small company, measurement and analysis may be straightforward. But once your firm grows, you need key performance indicators and metrics to track progress. Regular analysis and reporting helps you make data-driven decisions and adjust strategies as required. Similarly, effective communication becomes more complex in a larger organisation. Ensuring that information flows efficiently and that everyone is aligned with the company's goals and strategies is vital. “When we scaled up, we weren’t fully prepared for all the implications,” says Kijonková. “It took us a few years to realise that internal communications were critical. While operations had been similar in each country, practical day-to-day management at each depot was different and that created problems when they interacted with each other.” To scale up, Packeta needed to standardise not only communications, business processes and technology but also to centralise management. “It was hard for some people, especially older workers, to change but we took the time to explain to every employee at every office and depot why the changes were essential for our international growth,” says Kijonková. Increasing diversity delivers dividends For many companies, hiring the right talent is not just about finding individuals with a suitable skillset but about building a diverse organisation. Diversity brings together individuals with different backgrounds, perspectives, and life experiences and has a wide range of benefits. Diversity of thought can spark creativity and lead to innovative solutions to complex problems. When people from different backgrounds collaborate, they bring a wider range of ideas and approaches to the table. Similarly, diverse teams tend to make better decisions. They are more likely to consider a variety of viewpoints, challenge assumptions, and arrive at well-rounded conclusions. This can lead to more thoughtful and effective decision-making processes. “The founders of our company strongly support diversity and our workforce of 600 people has 58 countries represented,” says Repo. “As a technology company, innovation and thought leadership are a key part of our success. It is challenge that gives rise to new ideas and we are working hard to get women into leadership and technology roles to support that. There is also plenty of evidence that diversity in the boardroom improves performance.” A diverse workforce can help your company to connect with customers and therefore better understand their needs. Inclusive workplaces where diversity is valued tend to have higher levels of employee engagement and job satisfaction. When employees feel that their perspectives are heard and respected, they are more likely to be committed to the organisation's success. Companies that champion diversity are also often more attractive to a diverse pool of job seekers. “Part of my mission has been to bring more women into leadership roles and also into IT where they were underrepresented,” says Kijonková. “It can take persistence to deliver results, however. For example, if your goal is to achieve gender diversity at a board level – which we have now done – it takes time to develop talent so that you have a pool of motivated people to draw on.”

This article is based on a panel discussion held at Citi Commercial Bank&rsquo;s EMEA Digital Leaders Summit 2023 held in Prague in September. Comments have been edited for brevity and clarity.
<h3>Scaling up a company from a startup is exciting but presents numerous challenges. Baris Tezcan, Head of Citi Commercial Bank in Central Europe, talks to two business leaders about achieving goals.</h3>
Successfully scaling a startup requires a combination of strategic planning, resource allocation, adaptability and investment in infrastructure and talent. It is also important to maintain the qualities that made your business successful in the first place. Growth is a dynamic process that often involves overcoming numerous obstacles along the way.
<h2>Planning &ndash; combined with flexibility &ndash; pays off</h2>
&ldquo;When we launched in 2010, e-commerce was either facilitated by post offices or international logistics brands with limited domestic operations,&rdquo; recalls Simona Kijonkov&aacute;, Founder and CEO of global logistics and e-commerce platform Packeta.
Kijonkov&aacute; spotted a gap for domestic carrier networks that could connect brick and mortar shops and was able to grow very rapidly. &ldquo;The key to successfully scaling was a constant focus on execution,&rdquo; she says. Packeta now has more than 2,200 employees in eight countries.
In the context of scaling a company, execution is the process of implementing the strategies, plans, and actions necessary to achieve growth and expansion goals. It is the practical and operational side of scaling, where you translate your vision and strategic decisions into tangible results. Execution is a critical component of the scaling process because even the best-laid plans can fail without proper implementation.
Susan Repo, CFO at ICEYE, an earth observation data and solutions service provider that uses commercial satellites to provide space imagery to governments, insurance companies and other organisations, says that during rapid expansion, it can be tough not to get distracted. &ldquo;Over the past two years, we have grown from 200 to 600 people. To do that successfully, we have had to keep our heads down and concentrate on execution and operations.&rdquo;
Having a clear strategic plan is essential if growth is to deliver the anticipated results. Your plan must include not only operational targets but also identification and assessment of financial, operational and compliance risks. &ldquo;The importance of change management in relation to governance and legal matters is often underestimated,&rdquo; says Repo.
At the same time, adaptability is also important. &ldquo;In my previous role at Tesla, the mission of the company was significantly expanded from electrification of transport to becoming a leading sustainable energy provider when SolarCity was acquired in 2016,&rdquo; recalls Repo. &ldquo;The strategic goals of the company evolved given the expansion into a different business segment. But the overall objective remained operational excellence to facilitate rapid scaling.&rdquo;
<h2>Getting the details right</h2>
What might seem like unimportant minutiae in a small company can become major headaches in a large firm. For instance, in a small company, measurement and analysis may be straightforward. But once your firm grows, you need key performance indicators and metrics to track progress. Regular analysis and reporting helps you make data-driven decisions and adjust strategies as required.
Similarly, effective communication becomes more complex in a larger organisation. Ensuring that information flows efficiently and that everyone is aligned with the company's goals and strategies is vital. &ldquo;When we scaled up, we weren&rsquo;t fully prepared for all the implications,&rdquo; says Kijonkov&aacute;. &ldquo;It took us a few years to realise that internal communications were critical. While operations had been similar in each country, practical day-to-day management at each depot was different and that created problems when they interacted with each other.&rdquo;
To scale up, Packeta needed to standardise not only communications, business processes and technology but also to centralise management. &ldquo;It was hard for some people, especially older workers, to change but we took the time to explain to every employee at every office and depot why the changes were essential for our international growth,&rdquo; says Kijonkov&aacute;.
<h2>Increasing diversity delivers dividends</h2>
For many companies, hiring the right talent is not just about finding individuals with a suitable skillset but about building a diverse organisation. Diversity brings together individuals with different backgrounds, perspectives, and life experiences and has a wide range of benefits.
Diversity of thought can spark creativity and lead to innovative solutions to complex problems. When people from different backgrounds collaborate, they bring a wider range of ideas and approaches to the table. Similarly, diverse teams tend to make better decisions. They are more likely to consider a variety of viewpoints, challenge assumptions, and arrive at well-rounded conclusions. This can lead to more thoughtful and effective decision-making processes.
&ldquo;The founders of our company strongly support diversity and our workforce of 600 people has 58 countries represented,&rdquo; says Repo. &ldquo;As a technology company, innovation and thought leadership are a key part of our success. It is challenge that gives rise to new ideas and we are working hard to get women into leadership and technology roles to support that. There is also plenty of evidence that diversity in the boardroom improves performance.&rdquo;
A diverse workforce can help your company to connect with customers and therefore better understand their needs. Inclusive workplaces where diversity is valued tend to have higher levels of employee engagement and job satisfaction. When employees feel that their perspectives are heard and respected, they are more likely to be committed to the organisation's success. Companies that champion diversity are also often more attractive to a diverse pool of job seekers.
&ldquo;Part of my mission has been to bring more women into leadership roles and also into IT where they were underrepresented,&rdquo; says Kijonkov&aacute;. &ldquo;It can take persistence to deliver results, however. For example, if your goal is to achieve gender diversity at a board level &ndash; which we have now done &ndash; it takes time to develop talent so that you have a pool of motivated people to draw on.&rdquo;
&nbsp;
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Scaling up a company from a startup is exciting but presents numerous challenges. Baris Tezcan, Head of Citi Commercial Bank in Central Europe, talks to two business leaders about achieving goals.

From startup to scale up: lessons from entrepreneurs

This article is based on a panel discussion held at Citi Commercial Bank’s EMEA Digital Leaders Summit 2023 held in Prague in September. Comments have been edited for brevity and clarity. Rashmi Ghai, Head of Sustainability & ESG at Citi Commercial Bank, talks to three digital companies that are leveraging technology to improve the environment and people’s lives. While technologies such as solar power and electric vehicles are clearly critical to reducing carbon emissions, there are many other less obvious ways that digital technology can address ESG challenges. A myriad of purpose-led companies has sprung up to develop solutions that can have a real impact on some of the world’s greatest problems. “The digital and technology sector has a unique opportunity to accelerate the transition to a sustainable and equitable future.” Explains Rashmi, Head of ESG at Citi Commercial Bank. Some examples of these technology-based solutions like carbon emissions foot printing, carbon emissions accounting & reporting, supply chain technology, and Fin Tech platforms focusing on financial inclusion were discussed by her with three Citi Commercial Bank digital clients. Why clarity is critical One of the challenges for purpose-led companies trying to deliver an environmental or social impact is quantifying the scale of the problem they seek to solve. They need to identify, or source, relevant data, and ensure that it is reliable, consistent and verifiable. The seafood sector highlights the scale of the challenge. The global market is worth $1.8 trillion a year and is relied on by two thirds of the world’s population as a primary source of protein or for income. Yet the seafood supply chain is notoriously opaque and inefficient: waste can reach 45% in emerging markets and even in developed countries, it is as much as 25%. As many as one in four seafood items is mislabelled or misdated. Seafood Souq, a digital platform with a whole of industry approach for the global seafood market. They have developed the end-to-end digital infrastructure for the supply chain, covering trade, traceability, payments and data, and was established to boost quality, protect stocks and improve fishers’ livelihoods. “By sourcing the right data, we can connect buyers with suppliers, eliminate wastage, and bring traceability to the supply chain – which reduces opportunities for fraud,” explains Sean Dennis, CEO & Co-Founder. Data is also at the heart of Moove, which provides finance to gig workers in the mobility industry in both developed and developing markets. “We do workshops and surveys to understand drivers’ pain points, focused not just on financing but also lifestyle issues such as the cost of living, household dependents and other relevant considerations,” says Tingting Peng, Chief Capital, Strategy and Impact Officer. These insights inform the products and solutions that Moove develops. The need for action to reduce emissions to slow climate change is gaining momentum and being translated into requirements for companies to act. “Corporates in Europe – and in the near future, in California – are being asked to produce auditable greenhouse gas emission figures,” says Ellen Moeller, Head of Europe at enterprise climate platform Watershed. “These figures will be the basis for plans to reduce emissions. But for many companies, the task remains ill-defined and cutting through the noise is tough.” Watershed effectively provides a turnkey solution, enabling corporates to measure carbon emissions, both from their own operations and their supply chain, report them, identify effective actions, and communicate these to the board and to customers. Making an impact Identifying and quantifying problems is not enough – purpose-led organisations must also find ways to mitigate them and demonstrate the effectiveness of their solutions. More than 50% of the gig workers Moove is targeting worldwide have been denied access to financial services, and in regions such as Africa more than 90% of people have never had access to credit. “As gig workers have no employment contracts, they are invisible to traditional financial institutions,” explains Peng. Moove uses mobility workers’ productivity to underwrite their credit risk, giving them access to credit for the first time, a path to asset ownership and a sustainable income. Moove is also helping to facilitate the move to electrification: 60% of the vehicles it finances are electric vehicles and it invests in charging infrastructure. As a result of its research into gig workers’ needs, Moove has broadened its range of offerings. For example, it has rolled out health insurance for Uber drivers in sub-Saharan Africa and India that covers dependents, which is a key requirement for drivers, most of whom are male and aged between 25 and 45. Seafood Souq’s work with both suppliers and buyers has produced impressive results. “We worked with fishers in countries including Oman who caught tuna, and in the absence of an establish cold chain to markets, sold it to local traders for well under market value. Seafood Souq worked with an NGO to train the fishers to use pole and line practices and established a carefully monitored cold chain. As a result, the fishers are now able to secure true market value and consequently catch fewer fish,” says Dennis. On the buyer side, Seafood Souq works with a well-known hotel in the UAE that sought to source only certified seafood as part of its ESG strategy. “We audited around 400 products it bought and found enormous amounts of fraudulent discrepancies in certifications and mislabelling says Dennis. Seafood Souq built a sustainability dashboard for the hotel group, monitoring product credentials and validating its ESG performance. There can be a tendency to view ESG as simply a cost, but Moeller at Watershed says it can generate positive returns on investment. “For instance, moving to cloud data centres powered by renewable power improves efficiency and reduces emissions,” she notes. “A robust ESG strategy can also open up access to lower cost sustainable financing.” In summary, Rashmi from Citi explains how Supply chain technology platforms are scaling up to address seafood traceability and creating a safer and more equitable ecosystem, a mobility Fin tech platform is providing more including financing and access to greener vehicles, and an integrated carbon management platform is helping businesses create impact and accelerate their transition.

This article is based on a panel discussion held at Citi Commercial Bank&rsquo;s EMEA Digital Leaders Summit 2023 held in Prague in September. Comments have been edited for brevity and clarity.
Rashmi Ghai, Head of Sustainability &amp; ESG at Citi Commercial Bank, talks to three digital companies that are leveraging technology to improve the environment and people&rsquo;s lives.
While technologies such as solar power and electric vehicles are clearly critical to reducing carbon emissions, there are many other less obvious ways that digital technology can address ESG challenges. A myriad of purpose-led companies has sprung up to develop solutions that can have a real impact on some of the world&rsquo;s greatest problems.
&ldquo;The digital and technology sector has a unique opportunity to accelerate the transition to a sustainable and equitable future.&rdquo; Explains Rashmi, Head of ESG at Citi Commercial Bank. Some examples of these technology-based solutions like carbon emissions foot printing, carbon emissions accounting &amp; reporting, supply chain technology, and Fin Tech platforms focusing on financial inclusion were discussed by her with three Citi Commercial Bank digital clients.
<h2>Why clarity is critical</h2>
One of the challenges for purpose-led companies trying to deliver an environmental or social impact is quantifying the scale of the problem they seek to solve. They need to identify, or source, relevant data, and ensure that it is reliable, consistent and verifiable.
The seafood sector highlights the scale of the challenge. The global market is worth $1.8 trillion a year and is relied on by two thirds of the world&rsquo;s population as a primary source of protein or for income. Yet the seafood supply chain is notoriously opaque and inefficient: waste can reach 45% in emerging markets and even in developed countries, it is as much as 25%. As many as one in four seafood items is mislabelled or misdated.
Seafood Souq, a digital platform with a whole of industry approach for the global seafood market. They have developed the end-to-end digital infrastructure for the supply chain, covering trade, traceability, payments and data, and was established to boost quality, protect stocks and improve fishers&rsquo; livelihoods. &ldquo;By sourcing the right data, we can connect buyers with suppliers, eliminate wastage, and bring traceability to the supply chain &ndash; which reduces opportunities for fraud,&rdquo; explains Sean Dennis, CEO &amp; Co-Founder.
Data is also at the heart of Moove, which provides finance to gig workers in the mobility industry in both developed and developing markets. &ldquo;We do workshops and surveys to understand drivers&rsquo; pain points, focused not just on financing but also lifestyle issues such as the cost of living, household dependents and other relevant considerations,&rdquo; says Tingting Peng, Chief Capital, Strategy and Impact Officer. These insights inform the products and solutions that Moove develops.
The need for action to reduce emissions to slow climate change is gaining momentum and being translated into requirements for companies to act.
&ldquo;Corporates in Europe &ndash; and in the near future, in California &ndash; are being asked to produce auditable greenhouse gas emission figures,&rdquo; says Ellen Moeller, Head of Europe at enterprise climate platform Watershed. &ldquo;These figures will be the basis for plans to reduce emissions. But for many companies, the task remains ill-defined and cutting through the noise is tough.&rdquo;
Watershed effectively provides a turnkey solution, enabling corporates to measure carbon emissions, both from their own operations and their supply chain, report them, identify effective actions, and communicate these to the board and to customers.
&nbsp;
<h2>Making an impact</h2>
Identifying and quantifying problems is not enough &ndash; purpose-led organisations must also find ways to mitigate them and demonstrate the effectiveness of their solutions.
More than 50% of the gig workers Moove is targeting worldwide have been denied access to financial services, and in regions such as Africa more than 90% of people have never had access to credit. &ldquo;As gig workers have no employment contracts, they are invisible to traditional financial institutions,&rdquo; explains Peng.
Moove uses mobility workers&rsquo; productivity to underwrite their credit risk, giving them access to credit for the first time, a path to asset ownership and a sustainable income. Moove is also helping to facilitate the move to electrification: 60% of the vehicles it finances are electric vehicles and it invests in charging infrastructure.
As a result of its research into gig workers&rsquo; needs, Moove has broadened its range of offerings. For example, it has rolled out health insurance for Uber drivers in sub-Saharan Africa and India that covers dependents, which is a key requirement for drivers, most of whom are male and aged between 25 and 45.
Seafood Souq&rsquo;s work with both suppliers and buyers has produced impressive results. &ldquo;We worked with fishers in countries including Oman who caught tuna, and in the absence of an establish cold chain to markets, sold it to local traders for well under market value. Seafood Souq worked with an NGO to train the fishers to use pole and line practices and established a carefully monitored cold chain. As a result, the fishers are now able to secure true market value and consequently catch fewer fish,&rdquo; says Dennis.
On the buyer side, Seafood Souq works with a well-known hotel in the UAE that sought to source only certified seafood as part of its ESG strategy. &ldquo;We audited around 400 products it bought and found enormous amounts of fraudulent discrepancies in certifications and mislabelling says Dennis. Seafood Souq built a sustainability dashboard for the hotel group, monitoring product credentials and validating its ESG performance.
There can be a tendency to view ESG as simply a cost, but Moeller at Watershed says it can generate positive returns on investment. &ldquo;For instance, moving to cloud data centres powered by renewable power improves efficiency and reduces emissions,&rdquo; she notes. &ldquo;A robust ESG strategy can also open up access to lower cost sustainable financing.&rdquo;
In summary, Rashmi from Citi explains how Supply chain technology platforms are scaling up to address seafood traceability and creating a safer and more equitable ecosystem, a mobility Fin tech platform is providing more including financing and access to greener vehicles, and an integrated carbon management platform is helping businesses create impact and accelerate their transition.
&nbsp;
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How tech firms can turbocharge transition to sustainable future

This article is based on a panel discussion held at Citi Commercial Bank’s EMEA Digital Leaders Summit 2023 held in Prague in September. Comments have been edited for brevity and clarity. Growing inorganically has always been a key strategy for technology companies but it’s important to manage the risks, write Yishai Fransis, Head of EMEA Technology Investment Banking at Citi and Piotr Tyminski, EMEA Industry Head of Digital, Tech and Comms at Citi Commercial Bank. It is widely accepted that at least half of all M&A transactions fail, and some studies suggest more than 70% fail to create value. Moreover, both the macroeconomic and financial market environment has changed over the past 18 months, creating additional potential challenges. Even when M&A transactions are successful, gaining credit for them from investors (for listed companies) has always been tough. Yet if you can avoid potential pitfalls, acquisitions can deliver significant rewards. What’s the driver? A key way to help ensure the success of an M&A transaction is to have a clear framework to evaluate the deal. Typically, acquisitions are to gain access to product, technology, talent or new markets – or a combination of these factors. Scale is also an important motivation, as it allows firms to generate cost synergies by sharing resources. Romania’s largest listed IT company Arobs has completed nine acquisitions since its IPO in 2021. “Our company has two business lines, products and services,” explains Voicu Oprean, Founder and CEO. “For our product business, acquisitions are primarily about achieving a larger footprint so that we can integrate customers onto our platform. For our services business, we look to gain both customers and staff to increase our delivery capacity.” While some M&A transactions deliver incremental gains, others are part of an overarching strategy to transform the company by adding a series of additional capabilities. Ivan Jakubek, Chief Strategy Officer of mobility services company EUROWAG says it scrutinised the core services used by truck drivers and transport business owners when designing its M&A strategy. “We saw which services we had in house, which we could build or partner, and which we would have to buy. The transformation of our company, from a narrowly-focused fintech to a comprehensive mobility operation, was driven by addressing transport businesses pain points.” Navigating today’s headwinds Over the past 18 months, many economies have faced historically high inflation and interest-rate hikes, which have impacted the availability and cost of finance. Uncertainty has led to a divergence between buyers and sellers when it comes to valuations. In addition, there has been a change in sentiment towards the tech sector by some investors, which has reset values (though niche assets have held up well). Given today’s market conditions and sentiment, if you are in the market for an acquisition, you need a clear picture of the target’s value. And regardless of competition for the asset, you should stick to your valuation. Ideally, you should communicate your valuation methodology early on so that both you and the target company arrive at a price that both recognise as fair. Getting credit for deals When you do an M&A, and especially if you run a public company, it can be difficult to get credit from investors for the strategic benefits of an acquisition, and its contribution to P&L. Flemming Pedersen, CFO of the digital sports media group Better Collective – which has executed 32 acquisitions since it listed in 2018 (and has a dedicated M&A pipeline team that meets every two weeks) – says that communicating appropriate metrics to the market should be a priority. “We tell the market clearly what we are going to do and what the important KPIs are, and then frequently report these metrics,” he says. “Over time, this approach builds trust and confidence that M&A can lift performance.” In addition, you should clearly articulate how the M&A aligns with your company's long-term strategic goals and vision. Investors want to know how the acquisition fits into the bigger picture and how it contributes to your growth and profitability. One way to do this is by differentiating between organic and inorganic growth, so that investors can understand the benefits of each strategy. “In our case, while our competitors are swimming in their own line, we are effectively doing a decathlon,” says EUROWAG’s Jakubek. “We are not an M&A machine and we need to explain the story of each of our acquisitions and how they will contribute to overall future growth.” Focus on culture for success While M&As sometimes fail because of insufficient due diligence, in most cases much of the success or failure of an acquisition comes down to integration. Without a well-thought-out integration strategy, you may struggle to realise synergies, leading to operational inefficiencies. Cohesion may also be difficult to achieve. At a simple level, IT issues associated with integrating platforms can be formidable, for instance. More fundamentally, workplace cultures and values, and management styles may be different, especially if an acquired company is in a different country. Conflicts can create disruptions, lower employee morale, and hinder integration. Simply overwriting the culture of an acquired company is not the answer: its dynamic may be important to its success. You need to consider the integration of each M&A on its own merits. Jakubek at EUROWAG says you should spend time getting to know the company, its founders and their culture. “We start talking to companies at least two years before an acquisition completes,” he says. “We want them to want to join us. The sellers should always be on your side.”

This article is based on a panel discussion held at Citi Commercial Bank&rsquo;s EMEA Digital Leaders Summit 2023 held in Prague in September. Comments have been edited for brevity and clarity.
&nbsp;
Growing inorganically has always been a key strategy for technology companies but it&rsquo;s important to manage the risks, write Yishai Fransis, Head of EMEA Technology Investment Banking at Citi and Piotr Tyminski, EMEA Industry Head of Digital, Tech and Comms at Citi Commercial Bank.
It is widely accepted that at least half of all M&amp;A transactions fail, and some studies suggest more than 70% fail to create value. Moreover, both the macroeconomic and financial market environment has changed over the past 18 months, creating additional potential challenges. Even when M&amp;A transactions are successful, gaining credit for them from investors (for listed companies) has always been tough. Yet if you can avoid potential pitfalls, acquisitions can deliver significant rewards.
<h2>What&rsquo;s the driver?</h2>
A key way to help ensure the success of an M&amp;A transaction is to have a clear framework to evaluate the deal. Typically, acquisitions are to gain access to product, technology, talent or new markets &ndash; or a combination of these factors. Scale is also an important motivation, as it allows firms to generate cost synergies by sharing resources.
Romania&rsquo;s largest listed IT company Arobs has completed nine acquisitions since its IPO in 2021.&nbsp; &ldquo;Our company has two business lines, products and services,&rdquo; explains Voicu Oprean, Founder and CEO. &ldquo;For our product business, acquisitions are primarily about achieving a larger footprint so that we can integrate customers onto our platform. For our services business, we look to gain both customers and staff to increase our delivery capacity.&rdquo;
While some M&amp;A transactions deliver incremental gains, others are part of an overarching strategy to transform the company by adding a series of additional capabilities.
Ivan Jakubek, Chief Strategy Officer of mobility services company EUROWAG says it scrutinised the core services used by truck drivers and transport business owners when designing its M&amp;A strategy. &ldquo;We saw which services we had in house, which we could build or partner, and which we would have to buy. The transformation of our company, from a narrowly-focused fintech to a comprehensive mobility operation, was driven by addressing transport businesses pain points.&rdquo;
&nbsp;
<h2>Navigating today&rsquo;s headwinds</h2>
Over the past 18 months, many economies have faced historically high inflation and interest-rate hikes, which have impacted the availability and cost of finance. Uncertainty has led to a divergence between buyers and sellers when it comes to valuations.
In addition, there has been a change in sentiment towards the tech sector by some investors, which has reset values (though niche assets have held up well).
Given today&rsquo;s market conditions and sentiment, if you are in the market for an acquisition, you need a clear picture of the target&rsquo;s value. And regardless of competition for the asset, you should stick to your valuation. Ideally, you should communicate your valuation methodology early on so that both you and the target company arrive at a price that both recognise as fair.
&nbsp;
<h2>Getting credit for deals</h2>
When you do an M&amp;A, and especially if you run a public company, it can be difficult to get credit from investors for the strategic benefits of an acquisition, and its contribution to P&amp;L.
Flemming Pedersen, CFO of the digital sports media group Better Collective &ndash; which has executed 32 acquisitions since it listed in 2018 (and has a dedicated M&amp;A pipeline team that meets every two weeks) &ndash; says that communicating appropriate metrics to the market should be a priority.
&ldquo;We tell the market clearly what we are going to do and what the important KPIs are, and then frequently report these metrics,&rdquo; he says. &ldquo;Over time, this approach builds trust and confidence that M&amp;A can lift performance.&rdquo;
In addition, you should clearly articulate how the M&amp;A aligns with your company's long-term strategic goals and vision.
Investors want to know how the acquisition fits into the bigger picture and how it contributes to your growth and profitability. One way to do this is by differentiating between organic and inorganic growth, so that investors can understand the benefits of each strategy. &ldquo;In our case, while our competitors are swimming in their own line, we are effectively doing a decathlon,&rdquo; says EUROWAG&rsquo;s Jakubek. &ldquo;We are not an M&amp;A machine and we need to explain the story of each of our acquisitions and how they will contribute to overall future growth.&rdquo;
&nbsp;
<h2>Focus on culture for success</h2>
While M&amp;As sometimes fail because of insufficient due diligence, in most cases much of the success or failure of an acquisition comes down to integration.
Without a well-thought-out integration strategy, you may struggle to realise synergies, leading to operational inefficiencies. Cohesion may also be difficult to achieve. At a simple level, IT issues associated with integrating platforms can be formidable, for instance.
More fundamentally, workplace cultures and values, and management styles may be different, especially if an acquired company is in a different country. Conflicts can create disruptions, lower employee morale, and hinder integration.
Simply overwriting the culture of an acquired company is not the answer: its dynamic may be important to its success. You need to consider the integration of each M&amp;A on its own merits.
Jakubek at EUROWAG says you should spend time getting to know the company, its founders and their culture. &ldquo;We start talking to companies at least two years before an acquisition completes,&rdquo; he says. &ldquo;We want them to want to join us. The sellers should always be on your side.&rdquo;
&nbsp;
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How to get tech M&A right

This series showcases thought leadership articles that were the outcome of key panel discussions during the 2023 EMEA Digital Leaders Summit in Prague, Czech Republic. 

EMEA digital leaders summit 2023

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EMEA digital leaders summit 2023

IN THIS SERIES

How to get tech M&A right

How tech firms can turbocharge transition to sustainable future

From startup to scale up: lessons from entrepreneurs

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