#CheatCodes: Build, Buy or Acquire?
When I went to law school, my sole intention was to get my law degree so I could negotiate my own deals and never actually practice law. So…
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When I went to law school, my sole intention was to get my law degree so I could negotiate my own deals and never actually practice law. So my choice to do so (at a law firm no less) surprised myself, my family, and my friends. One of the reasons I continued practicing was because I realized that as a corporate attorney I had a front-row seat to the inner workings of my client’s businesses, and I was fortunate enough to see behind the curtain and witness what made businesses successful or ultimately fail.
One of the differentiating factors among successful companies is their ability to quickly reason through the Build vs. Buy. vs Acquire decision. As a buy-side M&A attorney I would always ask my clients why they were acquiring a company versus purchasing the services/product or attempting to build it themselves. Their responses were questions that they posed to themselves and their team, which usually fell into one of the following buckets (note that there’s always a bit of overlap):
Are we too big to quickly build the product? — At some point an organization shifts to maintenance mode (which is a feat in and of itself) and the organization has to face the harsh reality of bureaucracy inhibiting innovation. Should we buy our competition?- It’s often easier to buy out the competition rather than spend the money to try to compete with them, especially if they’ve put in years of marketing efforts and own a majority of the target audiences’ mindshare. As a company with competitors in a market that you’re currently in or want to go after, you need to consider the prospect of client-roll up and purchase of another brand’s goodwill. Do we need to build a team / have the expertise? — If another company is relatively new and has already shown promise in building the product, sometimes it’s cheaper to just acquire the team than spend the time and resources to go and build a team yourself. Is it in our wheelhouse? — Is the product/service closely coupled with the company’s main product offerings or is it an essential product/service but ancillary to the company’s core offerings. Sometimes the expertise lies with other teams, so it doesn’t make sense to invest the time, effort and personnel to try to pivot in an ancillary, but different direction.
Every business (including law firms of all sizes) will likely go through the analysis above as they grow.
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I’ve seen a lot of attempts by companies to build tools because the organization thinks that it aligns closely with their business or pain points related to delivering the services they provide. While it’s good that the organization has identified a gap or need to improve their business, they then need to ask — “Is what I am trying to build directly involved in the delivery of products and/or services that I’m providing?”
If the answer is no, then the Buy and Acquire paths make more sense.
Just to be clear, I might be the most guilty of making the mistake of wanting to build stuff myself. However, I’ve learned through watching many of my clients and through my own journey, that often the Build option takes too much time (which results in higher cost) and ultimately creates more issues than it fixes in the long run. As a result, we do a lot of buying here at HyperDraft because it allows our team to provide greater value to our clients.
When it comes to legal tech, law firms are experts on providing legal services to their clients. As any attorney knows, they’re hired to handle and put out fires for their clients, which leaves little time for attorneys to invest in their own delivery services.
That’s why we focused on building products that are customized and adapt to our core end-user — the lawyer and legal professional. When law firms or in-house legal departments have signed up for the HyperDraft platform, we ensure that the tools we provide fit into their existing needs and workflows. By doing so, they can experience immediate time savings and provide maximum value to their clients, faster and better than trying to build stuff themselves.
At HyperDraft, we built the ultimate toolbox for lawyers. Our team of lawyers and engineers have developed tools that enable lawyers to maximize their time and deliver greater value to their clients.
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