Startups aiming for rapid growth often have some important goals and tools to achieve them along the way. One of them is the gain in market share and the increase in the speed of product offering. One of the ways to achieve them is through M&As, that is, company acquisitions.
For an M&A to be successful, it is essential to start by answering some key questions. Why pursue a merger and acquisition? How does this align with the company's goals and strategies? Is this the right moment to take that step? Can I guarantee that 'my house is in order' to go through this expansion renovation? What do I need to do to ensure good system and team integration? All of this requires a lot of homework.
External pressure on the company also plays an important role. Investors often have high expectations and demand quick results, which can add an additional level of complexity to M&As.
According to a survey by ACE Ventures, which interviewed over 200 startup entrepreneurs, 57% of respondents plan to sell or merge with other companies in the next five years, demonstrating how this strategy remains a priority in the market. In any case, the current moment is still one of betting on operational efficiency, resource savings, and relentless pursuit of solutions and technologies, with artificial intelligence being the most sought after. Here, the question also arises: should I follow this market movement or does my business have other urgencies and opportunities? Is it that, before bringing AI into the business, we have more basic things to solve?
Once the business priorities and strategies are defined, it's time to assess the current situation. To begin with, it is worth remembering that one of the worst times to carry out an M&A is when the company is struggling, and the merger and acquisition is considered a lifeline. It's like having the household economy in crisis and bringing another family to share the house. The acquisition of a new company brings new employees, culture, products, and various factors that need to be balanced for a situation that was already complicated.
A good time to carry out an M&A is just before the moment when "there's extra money." The company is in a relatively stable financial position but sees the opportunity to further improve its situation before reaching a financial peak. This allows the company to make the most of the acquisition by investing strategically to grow and expand its operations.
Besides the economic aspect, the decision must align with the Go to Market (GTM), that is, the company's strategy to integrate the new products, services, or markets of the acquired company into its business model. Because it is a bold move, it may require a significant investment. But when done correctly, it positions the company ahead of competitors, enabling accelerated growth and new market opportunities.
In some situations, waiting for the risks to dissipate before making a decision can result in missing a valuable opportunity. In the context of M&As, a company sometimes hesitates to close a deal due to perceived uncertainties or risks, but this hesitation can create an opportunity for competitors to seize the opportunity first.
Before making a final decision, do not underestimate the importance of thorough and comprehensive due diligence. This process is the backbone of any successful merger or acquisition transaction. All the time spent thoroughly assessing the financial, legal, operational, and cultural aspects of the target company is well spent. A thorough due diligence not only protects the investment but also provides the clarity needed to make well-informed strategic decisions, significantly increase the chances of a harmonious integration, and leverage sustainable long-term growth.
Regarding the merger phase, recognized as a major reality shock and the biggest challenge of M&As, the advice is to conduct thorough planning, delegating clear tasks to C-Levels, without ever forgetting to prioritize and retain talent. Buying companies and technologies is just the beginning. Prioritizing the integration of people and leadership is the key here, as they are the ones who make innovation happen. In the end, the game requires a bit of risk, a lot of preparation, a tidy house, dialogue with stakeholders, and an understanding of how to blend and strengthen corporate cultures and diverse talents.
