Global mergers and acquisitions activity has reached an all-time high. As of October 2021, there were approximately $4.4 trillion in deals. How can startups, particularly early-stage startups, take part in this action?
A growth strategy that considers both organic and inorganic growth is the answer. It doesn't rely on either one. As a venture capital investor and growth equity expert for over 20 years, I have seen how companies can use these types of growth to their advantage as well as their disadvantage.
Businesses can grow in one of two ways. Organic growth is internal effort to increase revenue. This includes increasing output, expanding product offerings and building infrastructure. Inorganic growth can be triggered by acquisitions or mergers of other companies or joint ventures.
Inorganic growth is more rapid than organic growth, but it can often be a boost for companies and propel them forward. Both organic and inorganic growth are being used by startups to stimulate innovation and market growth. However, not all growth is equal and they can be mutually beneficial.
These days are gone, except for a small percentage of acquisitions that failed. However, this mindset still clouded our view of deals.
Inorganic growth is a strategy that accelerates the development of businesses in slow-growth industries like media. Software-oriented firms can benefit from the acquisition of new technology and customers through a merger or acquisition to help them outperform their competitors. In the current M&A boom, it is crucial for CEOs and founders to know when inorganic growth is appropriate and how to use that knowledge to grow your business sustainably.
