Insights — Acquisition & Buy-and-Build — 3 min read
Acquire or Build Technology
The choice between building technology or acquiring it is a trade-off between total customisation and immediate speed to market.
In short
Deciding to acquire technology is usually a play for speed and proven utility, while building is a play for long-term strategic control and specific customisation. You should acquire when the technology is 'table stakes' or a complex specialty that would take years to develop. You should build when the technology is your primary competitive advantage and no existing solution fits your unique needs.
In the modern commercial landscape, technology is rarely just a supporting tool; it is often the core differentiator. When a business identifies a technological gap—whether it's an AI-driven forecasting tool, a proprietary manufacturing process, or a customer-facing platform—the first question is always: 'Do we build it ourselves, or do we buy someone who has already done it?'
Building offers total control and a solution perfectly tailored to your needs. Acquisition offers speed and a proven, battle-tested product. This article provides a framework for weighing these two options, considering cost, time, and the long-term operational implications of both.
The case for acquiring technology
Acquisition is the fastest way to bridge a technological gap. When you buy a technology business, you aren't just buying the code or the machines; you are buying the years of trial and error that went into making it work. You are also buying a team that understands how to maintain and evolve it. For companies in fast-moving sectors like AI or software, the time it takes to build a solution from scratch often means the market opportunity has passed by the time the product is ready.
The case for building technology
Building is appropriate when your requirements are so specific that no off-the-shelf or acquirable solution exists. It is also the right choice when the technology is so central to your future value that you cannot afford to have it 'polluted' by someone else's legacy code or different architectural choices. Building allows you to create a proprietary asset that you own entirely, with no licensing fees or integration debt.
| Factor | Build | Acquire |
|---|---|---|
| Speed to market | Slow | Fast |
| Cost | Spread out, but often higher total | High upfront capital |
| Customisation | 100% fit | 70-90% fit (plus integration) |
| Risk | Execution/Development risk | Integration/Culture risk |
The hidden costs of acquisition: Technical Debt
One of the most overlooked risks in technology acquisition is 'technical debt'. When you buy a company for its software or processes, you are also buying its old bugs, its outdated libraries, and its idiosyncratic way of doing things. Integrating an acquired technology into your existing systems can sometimes be more expensive and time-consuming than building it from scratch would have been. A thorough 'commercial-technical' audit is essential before any technology acquisition.
Making the decision: The 70/30 Rule
A useful rule of thumb is the 70/30 rule. If an acquirable technology meets 70% of your needs today and can be integrated reasonably easily, acquisition is usually the better choice. The remaining 30% can be built or adapted over time. However, if no existing solution meets at least 70% of your requirements, or if the 30% gap represents your core competitive advantage, building is likely the more strategic path.
Considering growth through acquisition?
Acquisition Opportunity Engine identifies and researches businesses that fit your acquisition criteria — on-market listings and potential strategic targets that are not known to be for sale — and helps prioritise where to look first. Commercial research, not transaction advice. From £695 + VAT per month.
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