Instead of Hoping Your Startup Will Be Acquired, Maybe You Should Be Acquiring Even when a company is small, it can grow in a hurry by acquiring a compatible company that is even smaller.
By Benjamin Young Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
I've seen numerous articles offering quick tips and best practices on how a startup can increase its chance of getting acquired. Everyone seems to present the journey as a one-way road: The startup is born and, for the remainder of its private life, is focused on one destination: being acquired.
As a company at the ripe old age of three years, acquiring another company wasn't exactly on the top of our to-do list. We assumed, like so many young startups, that we were too early-stage to acquire another company. It wasn't until an investor nudged us to consider otherwise that we gave the idea any thought.
It all began two years ago at MoDevUx, a conference focused on mobile user experience design. There we met Ryan Hanna, then a network administrator and officer in the US Army Reserve. He had started learning to code five months prior to pursue his vision for a very simple tool that would help people, at any level, get in shape.
The result was Sworkit, a fitness app that creates custom workouts users can do anywhere. Sworkit was a natural fit. It changed Nexercise into a portfolio play of multiple apps, diversifying our offering. It also fit into our focus on corporate wellness by offering workouts that don't require equipment.
Related: Acquired Taste
Navigating our first acquisition was terrifying and thrilling, all at the same time. It taught us that you're never too small to take advantage of opportunities that will benefit your business. For other startups and companies (of any size), here are a few lessons we learned along the way.
1. Never count yourself out. Regardless of how small the startup, consider changing perspective from acquisition target to using acquisitions to grow. This may be a dramatic change of mindset for founders but it can introduce rapidly developing capabilities they did not already have.
Don't make the mistake of thinking that acquisitions are something that "big" companies do. Acquisitions can be a viable growth option for a company at an early stage, as well.
2. Cover all the bases. A decision this important must be thoroughly evaluated from multiple perspectives. Your typical "pros vs. cons'' list won't suffice.
Founders should take the time to understand the intricacies of a deal. There are multiple considerations, from a financing perspective in regards to asset vs. stock purchase, to an employment perspective in regards to staffing contracts and benefits packages. Shell out some cash for a lawyer or professional insight, if that's what should be done. Make sure you walk into an acquisition with eyes wide-open. You don't want any surprises.
Related: Instant Growth Through Mergers and Acquisitions
3. Find the perfect match. Make sure from the perspectives of revenue, design, technology, marketing and public relations that you can incorpate an existing brand with traction equal to yours. If the brand you are acquiring isn't a natural fit, move on. There's no sense forcing an acquisition if it doesn't make sense for the long-term growth and goals of your company.
As soon as I met Ryan, I knew that he was a natural fit for the team. He's a driven, self-taught developer who built the app from the ground up, so I knew he was up for the challenge. Ryan was never concerned about our going after a popular market with no shortage of players. He truly believed combining Nexercise and Sworkit would provide value to our users.
We opened up a whole new world of possibilities when we shifted our focus from getting acquired to acquiring. We ran into a few bumps when we chose to take Nexercise down the road less traveled but it turned out to be an incredible journey.
Related: 5 Tips for Getting Acquired
