Analysis of a merger in the software industry, case Nordic Solutions & Ravensoft

Mergers and acquisitions have been studied extensively, the reasons for them and how well they perform, but the studies have often focused on large public companies. The goal of this study was to find out if the reasons for mergers are the same for small companies in the software industry, as they are for large companies, and how well these mergers perform. To answer these questions I studied a merger between two small, privately owned Finnish software companies. This study was conducted as a case study, for which I collected data from semi-structured interviews, various presentations, annual reports and surveys. The interviews were done with the management and board members of the companies, which were also the largest shareholders, and all interviews were recorded and transcribed. I found that the reasons for mergers are largely the same for small companies as for larger ones, with the notable difference that small, privately owned companies do not take part in mergers due to management hubris or empire building, as the management is typically the largest shareholders, and as such, do not want to work against the best interest of the shareholders. In this particular case, the merger was ultimately a success, due to the careful selection of the target by the acquirer, although a portion of the merger potential was lost due to unsufficient merger execution planning.