A Key Moment

The ICT Industry continues an unstoppable phase of expansion and development, both globally and particularly in the Iberian Peninsula. Now that the pandemic seems to be coming to an end, the economic recovery, according to most indicators, seems unstoppable and the ICT Industry is forecast to lead this recovery, as technology is the main driver for change and development in most industries and activities of the economy and society. Most of the major operators and technology providers, the so-called 'Big Tech' companies have already designated Spain and the Iberian Peninsula as an international location for management and development of Cloud technologies for the coming years. 

At this crucial moment, all companies in the ICT Industry, large, medium and small, need to think more than ever about their evolution in the coming years. We believe that there are at least three interdependent aspects of growth to be decided:

1.  What is the strategic positioning that we want to have regarding the products and services we want to offer?
2.  What is the geographic footprint we want to cover?
3.  How we are going to finance the company's growth?

Depending on the stage of growth and development of each company, there are different possibilities, all of them with pros and cons. For a large company, for example, with a diversified offering, once a strategic plan has been decided, an option could be to divest or discontinue selected business units that will no longer be pursued and explore the selected complementary acquisitions in those business areas that are to be developed. For a small company, on the other hand, probably less diversified, it is even more critical to have a strategic plan and, based on it, to explore if any transaction can help to develop this plan. A good option is always a merger with a complementary company that can help both companies to achieve the next stage of growth.

The second strategic decision is the geographic footprint that the company targets to cover. Here again, it will be different depending on the size and stage of development of the company. A larger company can (and should) consider growing in a larger geographical area, for example, the entire Iberian Peninsula, while a smaller company may better focus on a smaller area.

The third aspect to explore and decide in a scenario of accelerated growth such as the current, are the different financing options that the company may have. There are currently at least three possible options that may be advisable for different situations:

- Bank financing
- Private equity financing
- Financing through an IPO

Each of the financing strategies offers pros and cons. We therefore believe that we are at a key moment for companies in general, and in the ICT Industry in particular. All of them will have to make important decisions regarding the issues we have explained. At Stelvio we specialize in advising companies in this industry on all these questions.