I’ve been learning more about start-ups recently and have noticed a lot of them want to be acquired. Why is this? Could they also choose to grow their business?
In: Other
Mostly two reasons – hopefully a good pay day, and/or more resources to expand the business.
A lot of start ups are fairly niche. You’re not going to be the next Amazon doing a bit of everything on your own with a small start up crew – you’re focusing on a specific thing. Once you get good at that one thing, you can try to work on and grow into another thing, and maybe another thing after that, but that’s a long, slow, and hard process.
Depending on who you’re being acquired by, that long, slow, process can become very easy or happen immediately. If you’re acquired by a strategic for example, that would be a large player in your general field. Your company would help fill their need – either by getting your customers, expanding their own larger business into your niche field, etc. A venture capital (VC) or private equity (PE) could help by injecting more money into your business, help form relationships with vendors or potential clients, etc.
It could also mean a good pay day out. Start a business, sell it for a lot of money, and get out of there.
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