What don’t most people know about start-up acquisitions?

That people, not companies, do acquisitions.

“Amazon”, “Salesforce”, “Google”, etc. don’t buy companies. Executives do — to meet their goals at companies.

Either the CEO makes a decision (if it’s a Big acquisition), or an SVP does for a smaller deal.

And they buy what they think the company needs — generally to fill a weakness. Either a weakness the CEO sees in the coming years (e.g., Zuck buying WhatsApp + Instagram), or a weakness an SVP has in her/his current plan (smaller M&A to hit the plan this year, or to fill a product gap the team couldn’t meet that has become important, or to tap into a trend they are way behind on).

Because of this, it can be very hard to predict who will buy whom from the outside. There are 100, even 1000 decent acquisition candidates every larger public company could acquire. All with great “synergies”.

But does the CEO or SVP see it? Will an acquisition help them fix their #1 gap, their #1 worry? If that’s you — you’ll be high on the list. If not, all the synergies in the world won’t make any difference.

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Published on March 2, 2018

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