Acquiring The Killer Instinct

New age technology businesses are silent killers. Major chunk of the start-ups that were gobbled over last few years are buried gradually or left almost lifeless to accelerate inorganic scale of the company. That may come even at the expense of a growing product before it gets sucked in. The rise and fall of the digital payment app FreeCharge is aligned with that thought. Such dead ends for start-ups are result of poor planning by acquirers or there is more to this than meets the eye?

- Sandeep Soni

Around 12 acquisitions have been made by Snapdeal in last seven years as per global data platform Crunchbase. Roughly 10 out of them don’t exist anymore and that includes ones which had clear line of growth such as online fashion and accessories start-up - Exclusively.com and advertising platform - Reduce Data. Similarly start-ups like electronics e-tailer Letsbuy, mobile marketing automation provider Appiterate were acquired by Flipkart and logistics technology start-up Sparse Labs and US-based food ordering app Urbanspoon by restaurant discovery app Zomato. More than that, it wasn’t about competition (at least in India in case of Urbanspoon).

SURVIVAL HACK

Nonetheless, shutting down such businesses are more a result of the strategic objective with which a company has been bought and the decision is made to let it grow or die rather than lack of entrepreneurs’ foresight. “Businesses may shut a company for consolidation of the sector. Sometimes it is also a question of running a separate entity vis-à-vis being a part of the large business and advantages and synergies that comes with it,” says Rajan Wadhawan, Leader – Valuation Services, PricewaterhouseCoopers India.

Acquisitions from growth perspective can be decluttered under four heads – first, to kill the competition; second, to acquire technology; third, to acquire talent and fourth, to acquire business or domain expertise. Acquiring for technology is perhaps among the most common acquisition deal types where technology is integrated into various business processes such as logistics, finance, marketing, product discovery etc.