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Mike Loria is a guy that startups dream of meeting. He acquires companies for IBM.IBM said it would spend $20 billion on acquisitions by 2015 and it’s been on a buying frenzy. The company has announced or closed seven acquisitions in about three months.
With IBM’s Green Hat acquisition (the first under IBM’s new CEO, Ginni Rometty), Loria has now been a part of a nearly 30 M&A deals in his career. He shared some surprising insights with Business Insider on what he looks for in a startup.
To impress Loria, first understand that his role is Vice President of Business Development for IBM’s Rational unit. He maps what customers want with what IBM can internally produce. Only if there’s a gap does he go shopping.
But Loria’s role isn’t unique. Every IBM business unit has at least one M&A person with the same outlook, he says.
Next understand that, unlike the work of an investment banker, for him an acquisition is more like a marriage than a date. “I live with the deals after I do them,” he says, “Our goal isn’t the deal. Our goal is products and customers.”
Once you understand that, getting your startup bought by IBM is surprisingly straightforward.
“We look for companies that we’ve been working with. If you show up as a startup and I don’t know who you are, we’ve never worked together, never done product integrations, don’t have joint customers, the likelihood that the discussion ends with me acquiring your company is pretty low. But I get a lot of those calls,” says Loria.
IBM has a slew of programs to help startups build add-ons to IBM’s wares. Programs include developerWorks and Ready For. Through these, IBM will learn about the product and help sell it. That’s half the battle.
A startup doesn’t have to specialize exclusively in IBM products, but having too many partners isn’t good.
When a startup tells Loria that they are partnering with HP, Microsoft, Oracle and IBM, he thinks “Really? You’re building on all these platforms and going to go to market with all that?”‘ He adds, “As a small company you can do anything you want, but can’t do everything you want.
He also wants to buy companies focused on a particular customer base with partners chosen accordingly. “The ones that stumble are worrying more about how many logos are on their website than specializing in any one of them.”
But do it right and Loria will listen. Startups with a handful of joint IBM customers gets Loria thinking, “maybe IBM should acquire this company.”