The pressure for all companies, including SMEs, to implement cost saving technology can sometimes seem overwhelming, both as a means of developing the business, and preparing it for a sale. This is especially true of SMEs lacking the knowledge or confidence to fully embrace new technologies. However, as Steven Barth of Foley & Lardner LLP points out, a lack of early implementation is not necessarily a bar to PE M&A activity.
PE firms are often excited by the potential of more traditional companies yet to act upon the opportunities afforded by technology. After all, for PE firms well-versed in these sorts of cost-saving exercises, this is an easy and logical first step to increase margins in the first few years post-acquisition.
Many PE firms love buying into industrial or manufacturing companies that haven’t done much from a technology advancement or robotics perspective, because that’s an area where they can drive increased productivity and therefore higher margins - Steven Barth