What is a Platform Acquisition in Business?
A platform acquisition is the acquisition of a company that produces a platform on which the acquired company’s products are built. The larger company wants to work with fewer companies, and thus they want to buy one or more companies in which they can put all their eggs. They do this because it is cheaper than building their product, and it isn’t as risky because they know the product will sell, even if not as well as initially. Here is some platform acquisition in business.
1. Operating System Acquisitions
In this type of acquisition, the acquired company is supposed to build out a full or part of a platform from which the company builds. The most common operating systems are built this way. It is generally easier for the acquiring company to get another company’s product than to create one. With the operating system, it is easy for both companies to come together, and they can use each other’s products in their software packages. Dr. Jordan Sudberg advises the merger of several companies to combine the platforms they develop.
2. Application Software Acquisitions
This type of acquisition is similar to operating system acquisition. Still, instead of creating one complete OS with all its apps, these are individual applications that work separately but together as part of a bigger picture. They may still work on the same platform. Both individual companies and big conglomerates use this type of acquisition to get their hands on a product they think will sell well or that is just plain better than their current product.
3. Platform Technology Acquisitions
This type of acquisition is when a bigger company wants to buy a smaller company that makes a piece of technology to help them make its platform faster. The acquiring company wants to incorporate more advanced technology into the platform they have been building and cannot get it done in time. This sort of acquisition is beneficial for both parties because it helps the acquiring company complete its goals, and it also helps the smaller company see its product being used on a much broader scale than it originally thought was possible.
4. Product Development Acquisitions
This type of acquisition is when a bigger company wants to build a product on the same framework that another company already has built. In most cases, the acquiring company will want to modify it in certain ways and integrate it into its product. It is advantageous because they can reduce mistakes and use proven technology, so they won’t need to waste time developing their own and won’t have to learn new programming languages. According to pain management specialist Dr. Jordan Sudberg, these acquisitions are great for everyone involved because it is a win-win situation.
Platform acquisition is an important component of a business in today’s marketplace. There has never been a better time to buy into a large, stable, and proven platform, or there has never been a better time to help build one up and make something that others can use. It is now easier than ever for business owners to get involved with companies on either side of the spectrum, whether it be focusing on the development of their products so that they can have more control over them.
