One of the most common questions we encounter from Australian and New Zealand software company founders is: “Should I expand geographically to attract a buyer?” It’s a strategic decision often framed as a necessity for relevance in the M&A process. The answer, however, depends heavily on your company’s structure and target market.
The Horizontal Perspective: Relevance Across Borders
For software companies that address broad, horizontal markets or serve multiple verticals, geographic expansion often does play a critical role in appealing to buyers. Buyers of these companies seek solutions that can seamlessly scale across borders. In such cases, being relevant and dominant in multiple geographies can enhance your valuation and attract strategic interest.
The Vertical Advantage: Depth Over Breadth
If your company operates in a highly verticalized market with significant barriers to entry, such as strict regulations, long relationship-building cycles, or specialized knowledge, geographic expansion is not necessarily a priority. In fact, the inverse is often true. Buyers—especially those entering a new market—may highly value the depth of expertise and relationships you’ve cultivated in your home geography.
Why Verticalization Can Be a Moat
A niche focus in a particular region can create what Warren Buffett famously calls a “moat.” Regulatory expertise, deep local relationships, and market-specific trust are not easily replicated. These attributes can make your company an attractive acquisition target without needing an expansive geographic footprint.
For example, a software company that provides specialized solutions for the healthcare sector in Australia might be seen as a gem by international buyers. They see not just your technology but also your ability to navigate complex regulations and relationships within a particular system—skills that can be challenging and expensive to replicate.
Ultimately, the right approach depends on understanding where your company’s strengths lie—whether it’s scaling across borders or deepening roots in a niche market—and leveraging those strengths to maximize strategic appeal.
