September 28, 2016

In mergers, a startup can build on what it’s best at

A startup merger can bring a smaller company more resources.

Startups stand to improve from a merger if they choose the right partner and know what they're getting from the deal. In the best case scenario, younger businesses can see multiple strengths in the other company and imagine the impact they would make as part of their own venture. An M&A advisor can have a particularly strong impact on those startups that need oversight.

Some of the advantages of a merger are just as viable for more developed businesses as they are for startups. Every business can benefit from increased access to technology and benefits. A key difference for the startup is the timing of the acquisition. Depending on the focus of each company, a merger could bring a startup more fully into a new market, thanks to the expertise at their disposal.

Another good sign of a startup merger is one in which both organizations learn from the other. Ideally, the merger will give each company a new relationship to experience and draw from. If the companies were previously competitors, they can put that energy aside and focus instead on using their strengths to help their new partner.

No matter who is buying who, both businesses should be ready to accept the other's advice and create a stronger market presence. This could take time, especially if there are many previous business commitments and relationships to consider, but in the end, the results should leave each company best suited to each other. They can also use their individual performances to help create a reasonable plan for the combined entity.

In 2014, Inc. reported on a merger between The Biochar Company and Biochar Solutions Inc., two green companies that had to adjust to each other to make a merger work. BSI co-founder Morgan Williams compared the process of merging to playing in a band, in that only so much compatibility can be determined in advance.

Treating each acquisition strategy separately will give even inexperienced businesses a good way to focus. At the same time, planning any merger around a startup's strengths can put it in a better position to succeed.