Enticed To The Altar

Tweet

Marrying season has arrived for small companies. Many of them are going to the altar with much larger corporations that have a substantial dowry to invest in their operations.

"Minimergers" usually involve young technology companies, often called "metoos" because they offer variations on products already in the marketplace. "These small companies realize they can't exist as stand-alones anymore," says Burgess Jamieson, president of Jamieson & Co., a San Jose, Calif., venture capital firm. "The mergers and acquisitions people are going to have a field day with them."

The problem for some small technology companies, says Jamieson, is that the public-offering window is closing and venture capital is getting tight. This leaves many me-toos wobbly from a shortage of working capital. The choice is often grim: Sell out or collapse.

The marriage brokers disagree on how receptive big companies will be to a pro posal. Arthur Rosenbloom, president of MMG Capital Corp. in New York City says that many larger companies see a financial advantage in acquiring small operations that complement their present business, rather than starting new divisions from scratch. A recent example is Commodore International Ltd.'s plans to acquire Amiga Corp., a small private company struggling to make a high-performance personal computer similar to Apple Computer Inc.'s Macintosh.

But Alan E. Rothenberg, president of The London and San Francisco Co. of San Francisco, sees few partners for the metoo companies that are showing up at his door "in droves." Many corporations are wary of being hitched to companies in an industry in which technology is changing rapidly. This skeptical attitude could hasten a shakeout in the microcomputer industry.