Micro acquisition is when one company buys a service given by another company and both the companies get on board with the terms of their acquisition. Some companies grow from start while other companies acquire the services provided by other smaller company.
Most of the time this type of acquisition is made in order to procure a new technology, or use a new feature offered by this technology.
Micro acquisitions are done for a variety of reasons:
- The service provider wants to sell in order to be part of something bigger
- Sometimes their business is running short of budget, therefore becoming a part of another company helps grow their business.
- Experience new ventures and get exposure.
Software as a service (SaaS), where the whole product lies on the cloud accessed by a third party. It allows users to pay for the service online without constantly worrying about up gradation payments. It is an exciting alternative to the traditional models where you have to do the installations on your systems whereas SaaS solutions are easily accessible on the internet.
Some benefits of SaaS solutions include:
Cost effective: As SaaS model is being used in a shared environment, the maintenance cost is divided among the users. Also you don’t have to worry about expensive infrastructures therefore it is budget friendly especially for the new start-ups.
Scalability: SaaS solutions user friendly. Their integration is easy as compared to the traditional models; where you have to buy another service for the integration, however with SaaS you can easily add in functionalities required for scalability.
Updates: With SaaS, when the provider upgrades the solutions, it becomes available for the customers. So the user doesn’t have to worry about keeping the software up to date.
List of SaaS solutions typically suitable for micro acquisitions:
Type of SaaS solutions for micro acquisitions depends on the requirement of the acquirer company. Below are some of the few examples:
1. Customer relationship management (CRM): A CRM provides customer service solutions and manages customer’s interactions with the company.
2. Human resources software (HR): This type of systems are used to meet recruitment needs, manages job vacancies and applications
3. Project Management tools: These tools help manage the project tasks, prepare to-do lists, and assign priorities and deadlines to these tasks. It streamlines the whole project by breaking it into simpler do able chunks.
4. Document Management: Helps manage different types of document in an orderly fashion.
5. Virtual event platforms: Allows users to manage virtual events such as video calls, webinars, meetings etc. etc.
6. Expense management and online invoicing systems: Helps tracking of receipt, manages online transactions, and invoicing for business.
7. Business Intelligence software: These software help analyse data and create reports for the business.
8. E-commerce: It is an online market space where users are provided with all in one business functionality.
9. Cloud storage services: Users can store their data over the cloud and make it more secure.
Pros and Cons of micro acquisitions of SaaS solutions:
Pros:
- Cost-Effective: Rather than spending too much money on developing a service or asset from scratch, the companies buy the services of a smaller company.
- Time-Effective: Time is also saved as it is faster to make into use the assets bought through micro acquisitions.
Cons:
- Integration challenges: Integrating an already built service into an existing system comes with its challenges.
- Limited Scope: As the scope of the SaaS Company providing micro acquisition is generally smaller, it may not match with that of the acquiring company.
-Expensive: At times when the service is too much in demand, the SaaS providing company may charge extra for it.