Chris Legg serves as a senior managing director at Progress Companions and as a basic associate at Progress Ventures, the agency’s enterprise capital arm.
Mergers and acquisitions exercise is at an all-time excessive — world mergers and acquisitions have already damaged 2020 ranges with about $4.4 trillion price of offers as of October 2021. So how can startups, particularly early-stage startups, get in on the motion?
The reply is a progress technique that takes each inorganic and natural progress under consideration, by no means counting on yet another than the opposite. In my function as a progress fairness professional and enterprise capital investor for greater than 20 years, I’ve seen firms leverage these totally different sorts of progress to their benefit — and their downfall.
Primarily, companies can develop in two methods: Natural and inorganic. For our functions, natural progress refers to inner efforts to extend income, like dashing up output, increasing product choices, constructing infrastructure and clients, and hiring workers. Inorganic progress is pushed by mergers with or acquisitions by different firms or joint ventures.
Natural progress tends to be slower, whereas inorganic progress typically acts as a booster shot, propelling firms ahead. Startups are at the moment harnessing each to drive innovation and market progress, however not all progress is created equal, and one shouldn’t be mutually unique from the opposite.
Gone are the times (largely) the place a good portion of acquisitions failed, however that mindset nonetheless clouds our notion of offers.
Inorganic progress has historically been a method to speed up the event of companies in slower-growth industries, like media firms. For extra software-focused companies, the brand new expertise or clients acquired through a merger or acquisition helps it leapfrog its rivals. It’s important for founders and CEOs to grasp precisely when inorganic progress is smart within the present glut of M&A exercise, and how you can take a considerate, balanced method to rising what you are promoting sustainably.