Startups get acquired everyday and for so many different reasons; however, most acquisitions do not make it to Top News and you only hear Acquisitions with Top Dollar Values.
So Big Companies/Investors acquire startups for so many different reasons: Talent, Technology, Completing the "Whole Product", Patent, Market Share, Competition or Future Competition or Eat Up of Market Share, Expanding an Existing Market, Acquire a New Market, Diversify their business model etc... Yes all of these are great reasons to acquire a Startup but eventually when you make an investment, you expect return hence everything boils down to increasing the bottom line -> More Value to Shareholders i.e. Overall Company Value or Profitability.
Let us look at few recent acquisitions in our marketplace, interestingly both of them were in the "Food Tech" industry if we may call it that way. Talabat, a USD170 Million acquisition and Shahiya, a USD13.5 Million Dollars; two different acquirers, one German and another Japanese - so what do both acquired companies have in common?
Both are the best at what they do, not second, not third - they are the leaders with the largest market share in their Target market and that's what makes them really attractive opportunities for acquirers.
And in both cases, acquirers are already in that business expanding their global markets.
So why is there such a big gap in the acquisition value?
Well, that goes back to the size of the opportunity and the Target Market for each business. In other words,Talabat is a Food Delivery Business that has a Large Existing Market (Existing Users) and has a very big potential market; while Shahiya has relevantly smaller target market size at least in the eye of an Acquirer. Further, like any other buy and sell transaction, it is subject to supply and demand, negotiation, and How Big the Startup Value itself..
P.S. When you build a Startup, the mindset should be you build it in a way for the long run to be successful, and if you are successful you would probably have all kind of options in front of you keep it private and grow it, going public, and definitely you will have acquisitions offers on the table. So here’s our point on this - Don't Worry about Acquisitions from Day 1 - Acquisitions are the result of a good startup and not the objective.