Say It With Me, CEOs of Small Companies: Acquisitions are a Valid Form of Growth

Take a leadership role in a small Silicon Valley company and before too long, you’ll get the clear -- if subtle -- message that inorganic growth is somehow less than. (I mean, until you’re the subject of the acquisition, in which case it’s champs all around, but that’s a story for another day.)

Less worthy. Less strategic. Less clever. For some leaders, especially of tinier companies, it’s almost like an acquisition of someone else’s technology or customer base is an admission of weakness, a fear that being unable (never mind unwilling) to do it in house says something bad about you. It’s like those last 10 points of growth that came from when you acquired another company just aren’t “real” growth.

To which I say: let’s just get over ourselves already. Seriously! There are so many good and valid reasons to make an acquisition and they all add up to one thing: a company that’s more strongly positioned and less resource tapped. Don’t be so precious; if the time is right and the reasons are good go for it.

Here are some of those very good reasons to consider an acquisition of some kind.

Time to build means time lost in the market

Most of us already have teams that are more than occupied with their roadmaps and plans s. But there may be goals that have to be reached that would require retasking your people in a way that simply doesn’t make sense. Consider the ramp time required, missed customer opportunities and the burning of cash that’s part of organic growth -- plus the fact there’s inevitably a competitor that’s already where you need to be. Your conclusion should be this: the cost of doing it yourself can be too great. 

We just did this when we acquired some of Adaptilab’s amazing tools (including a really substantial library for technical interviews for data positions). It was a decision that boosted us  in every way -- saved us time, saved us money, expanded our customer offering and moved us forward -- and I have zero regrets (just pride in a good outcome).

Reminder: you don’t know it all

We’re all so comfortable seeking outside expertise in our personal lives (or do you diagnose your own strep throat, cut your own hair, change your oil and rotate your tires?). So it’s a bit astounding that we’re so loath to acknowledge that sometimes, the best knowledge about a space or problem lives outside your team. A full acquisition -- or even just an acquihire -- can be the most expedient path to a better market position. So embrace pragmatism and get it done. Get smarter together faster.

Gain some customer and revenue

This feels like a no-brainer but I’ll say it anyway: unless you’re just acquiring technology, acquisitions typically bring customers (and their associated revenue) with them. That’s huge. In one fell swoop, you add new solutions to your portfolio, fresh capability to your team, and revenue to the bottom line. Maybe you also gain access to new markets. New customers give you an opportunity to cross-sell and upsell as well. 

Some last things to consider

To be clear, acquisitions should always be made with careful consideration and due diligence. There are a ton of readily available resources that delve deeply into getting it right so I won’t belabor the point. But if you absolutely don’t want to get it wrong from the get-go, you’ll want to make certain your cultures, values and leadership styles generally align or complement each other. You also must agree on target users, market fit and/or a unified problem to solve so you don’t spam the market with too many products that don’t tell a cohesive, compelling story about solving customer pain points. Then you’ll have spent precious dollars on an acquisition which won’t gain you much. And spend some time deliberately building a collaborative rapport between your teams so it feels like it’s all of you together in the same foxhole, not us versus them.

So tell me: have you made an acquisition or been part of one? What were your best practices? How did it help your company grow?