Corporate acquisitions of startups often fail due to a lack of understanding and integration between the two entities. Startups are typically acquired for their intellectual property, team, or customers, yet the acquirer often fails to maintain the startup’s agility, speed, and entrepreneurial culture. This can lead to a decline in productivity and innovation, and ultimately, failure of the acquisition.
The acquirer often imposes its own processes and procedures on the startup, stifering its creativity and innovation. Additionally, the acquired team may face culture shock due to the difference in organisational culture and values. This can lead to dissatisfaction and talent attrition, further undermining the acquisition’s success.
Startups can be more successfully integrated into larger corporations by maintaining their independence. This can be achieved by keeping the startup’s team intact, allowing the startup to operate as a separate entity, and by preserving its culture and processes. This approach can help retain the startup’s innovative spirit, ensuring the acquisition brings value to the corporation.
The success of an acquisition also depends on the acquirer’s ability to understand the startup’s business model and market. Misunderstanding these aspects can lead to poor strategic decisions, making the acquisition unprofitable. Therefore, thorough due diligence and strategic planning are crucial for successful corporate acquisitions of startups.
Go to source article: http://steveblank.com/2014/04/23/corporate-acquisitions-of-startups-why-do-they-fail/