Dear SaaStr: What Do Most People Not Know About Acqusitions?
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 (relatively) 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., Salesforce buying Slack, Facebook 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 1,000 decent acquisition candidates every larger public company could acquire. All with great “synergies” on paper and even in reality.
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.
This is the #1 reason why if you do want to sell your company someday, it’s good to build relationships with the founders and top execs at all your potential acquirers. At least, as much as is practical.
A related post here:
(note: an updated SaaStr Classic answer)
How long did the $12 Billion (!) deal for Intuit to acquire Mailchimp? 12 months. A full year.
And it was the last call Ben Chestnut took. pic.twitter.com/kfi8I9Jx8q
— Jason ✨Be Kind✨ Lemkin (@jasonlk) January 25, 2023