The Power Play: Why Acquisitions Are the Ultimate Growth Hack

In the high-stakes world of business strategy, acquisitions have always been a key tool in the corporate arsenal. But now, with IPOs in a nosedive—just 154 in the US last year compared to a dizzying 1,035 in 2021—acquisitions are no longer just an option; they’re the strategy. Global mergers and acquisitions tell the story loud and clear, with over 55,200 deals announced in the same period, proving that when one growth avenue narrows, another expands.

Survival in business, however, isn’t about playing it safe, it’s about being bold.

As economic landscapes shift and traditional strategies falter, acquisitions have become the ultimate power move, catapulting companies into new markets, delivering instant innovation, and injecting fresh energy into legacy giants. Forget incremental progress; today’s winners are those who bet big, move fast, and think strategically. In this high-stakes game, startups aren’t just businesses, they’re golden tickets to the future. And for corporates, investors, and founders alike, the stakes have never been higher.

The message is loud and clear: in a world of economic unpredictability, buying innovation beats building it.

Take a moment to revisit Google’s £400 million acquisition of DeepMind in 2014. At the time, it seemed audacious—borderline reckless—to spend that much on a little-known UK-based AI startup. Today, the move looks genius. DeepMind didn’t just bring Google cutting-edge AI; it injected a culture of relentless experimentation that corporate behemoths often struggle to cultivate internally. The result? Google now leads the global AI arms race, thanks in no small part to DeepMind’s trailblazing breakthroughs in healthcare, energy efficiency, and beyond.

This isn’t just a Google story; it’s a playbook. For big companies, acquiring startups isn’t a luxury—it’s a necessity. Scale breeds structure, and structure stifles creativity. Startups, by contrast, thrive on the very chaos that corporations fear. They’re fast, fearless, and focused, making them the perfect antidote to corporate inertia.

But why is this moment particularly ripe for acquisitions?

The answer lies in the speed of change. Industries are being rewritten almost overnight by technologies like AI, blockchain, and clean energy. For large companies, keeping up isn’t just hard—it’s nearly impossible. Acquisitions provide a shortcut, a way to leapfrog competitors and buy not just the innovation but the teams driving it.

This brings us back to the idea of “acquihiring”—a now-popular strategy where the value of a team often outweighs the value of the technology they’ve built. When Google acquired DeepMind, it wasn’t just buying algorithms; it was securing some of the sharpest minds in artificial intelligence. That team has since become a cornerstone of Google’s AI dominance, achieving feats that would have been buried in bureaucracy had they been incubated within Google’s traditional structure.

And it’s not just Google playing the game. When SoftBank acquired ARM Holdings for £24 billion in 2016, the Japanese giant wasn’t just buying a chip designer; it was acquiring ARM’s uncanny ability to stay ahead of the curve in the fast-evolving mobile chip market. SoftBank knew it couldn’t match ARM’s pace of innovation internally, so it did the next best thing: it bought it.

For founders, this should be a rallying cry.

Startups don’t need to be perfect to get acquired, they need to be innovative.

Acquirers aren’t looking for spotless balance sheets or perfectly optimised operations. They’re looking for vision, adaptability, and the ability to solve real problems. Take Onfido, for example. The identity verification startup was snapped up by TPG Capital for £800 million, not just because its tech was cutting-edge, but because it had proven its ability to innovate in a rapidly changing market. TPG didn’t just see a product; they saw a team that could thrive on the global stage.

Of course, not every acquisition goes off without a hitch. Regulatory hurdles and cultural clashes can derail even the best-laid plans. Adobe’s attempted $20 billion acquisition of Figma fell apart due to regulatory pushback in the UK and EU. Similarly, Google’s parent company Alphabet saw its $23 billion bid for cybersecurity startup Wiz rejected, with Wiz opting for an IPO instead. These cautionary tales highlight that while acquisitions are a powerful growth tool, they’re not a guaranteed win.

But when they do succeed, they’re transformative—not just for the acquirers but also for investors. In a market where IPOs are becoming less predictable, acquisitions provide a faster, often more lucrative, path to liquidity. For investors, this isn’t just a silver lining; it’s a golden opportunity. Startups that position themselves as acquisition-ready—whether through market leadership, innovation, or strategic value—are far more likely to deliver impressive returns.

So what’s the takeaway?

For founders, it’s about embracing what makes startups special. Agility, creativity, and bold thinking aren’t just advantages; they’re your superpowers. These are the qualities that large corporations can’t replicate, and they’re what make startups irresistible acquisition targets.

Acquisitions are no longer a backup plan—they’re the main event. In today’s market, the future doesn’t belong to the biggest companies. It belongs to the smartest.

Until next time!

Cheers,

Rich

Co-Founder & General Partner
Founders Capital
+44 7900 500 367
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