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Mergers & Acquisitions: Should you build a startup expecting to be acquired by a specific company?
JB
JB
Joshua Blank, Sales Manager and Entrepreneur answered:

I would highly caution against taking this strategy.

First, if you are considering an exit strategy it's important to understand what your motives are behind selling. Are you simply looking to sell to the highest bidder? Would you like to stay on with the company you sell to? Do you think you could go back to working for someone else?

If you're selling for money alone, often times the highest bidder is someone you wouldn't expect. Companies who are in certain markets tend to see the majority of the deal flow (acquisition targets) because the sellers both intermediaries and company owners approach these buyers first. Companies are constantly looking to expand into adjacent industries and will pay a premium to do so.

An example of this would be a starter log company acquiring a chocolate chip cookie brand or Accenture acquiring marketing firms.

If you have other considerations besides price, you won't know until you have ownership meetings and get a better sense of whether your goals are compatible with theirs.

To echo the sentiments of the previous answers, focus on creating value and also stay on top of the m&a trends in your industry to gauge the valuations and where they seem to be trending.

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