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The Problems with Mergers & Acquisitions



As history shows in most cases, more than 50% according to many studies and research indicates M&A usually have negative implications for the acquirer rather than the acquired in terms of financial expectations versus reality. Additionally, there are many internal issues that will affect the overall performance of the acquiring company.

In a case of a startup, being acquired may be profitable and desirable for them in general. From an entrepreneur’s perspective, it is highly beneficial as they will essentially cash out or consider a stake buyout. Aside from that, there are many reasons on why an acquisition decision is chosen instead of internal growth, which may include elimination of competitors, gaining competences and resources as well as growth objectives.

However, I will highlight some of the notable immediate problems that may occur after acquiring another company which in most cases, majority of companies face..

Difference in Work Culture

This is especially true as both companies will collide in their work culture after acquisition. This can be an issue internally if one company practices a more organic culture in comparison to a mechanical one. Employees from the acquired company will then have to adapt to the new working environment which may lead to them being dissatisfied and unmotivated in terms of their intrinsic rewards.

Communication Issues

This can happen whereby there will be asymmetric information between the two companies. An absence of clear communication may lead to issues in terms of operations and executions. Thus making both companies inefficient in their deliverables and this may affect certain value chains within the company. Key stakeholders and managers must ensure that communication be clear and well received in all departments.

Clash of Authority

Existing managers or higher level executives in the company being acquired are in a conflict due to the clash in management and work structure as the acquiring company may assign new managerial roles. Organization charts are restructured and this may upset some of the existing employees as their career projections are diverted. Delegation of roles and management styles will be a key factor in keeping employees happy in the company.

Optimistic Bias

The acquirers may have an optimistic bias towards their acquisition. The thought of acquiring another company may sound like a good idea during the early stages and potentially may aid in increasing profitability as well as market share. This can lead to improper judgement on the market forces. Also known as the Winner’s Curse, in which acquirers may have overestimated its valuation and future prospects based on their overly-optimistic views. Unfortunately, there is a high level degree of uncertainty considering its an asset.

These are just some of the immediate factors that comes to mind when discussing on the issues acquirers face.

In likes of the recent Grab’s acquisition on Uber’s South East Asia’s market, are they experiencing some of the factors mentioned above? The acquisition opens up the market for more competitors or alternatives to enter where price would be major determinator on capturing certain market shares. Grab will essentially have to consider the factors mentioned to ensure smooth transitioning and effective operational procedures. Only time will tell if Grab’s acquisition is a success in really achieving its targets or goals.

With that being said, of course, some acquisitions are successful with great leadership and foresight. However, one must first consider the factors mentioned to really grasp the implications of acquiring a company then only one is able to overcome and strive towards its organization’s objectives such as profitability or market share.


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Fear & Desire with Emerging Technologies



For all their complexity, we tend to think about emerging technologies in surprisingly simple ways. Either they are a force for good. That is, for eliminating disease and pain, and offering the prospect of not only extending our lives but bringing a level of physical and cognitive enhancement that even the previous generation could not have imagined. We get a sense of the apparently limitless power of artificial intelligence to help us grapple with the widest array of personal, social and physical problems, especially as we apply it to the massive and growing resource of Big Data. And we particularly enjoy the expanding connectivity that comes with all this.

Or we see them as threatening, especially as artificial intelligence increasingly makes important decisions for us, as that same connectivity is used to exploit us and as it distorts our view of the world, and as genomics explores and alters the very codes of life. They are also seen as a threat to the ecosystem through the toxicity from mining rare metals, from the gases and microplastic waste from modern appliances and through the dumping of ‘old’ technologies as the replacement cycle shortens.

Or, even more commonly, we see them as being all of this, leading us to think that all we have to do to enjoy all the benefits is to constrain the risks they pose. A comfortable trade-off, a pact of some kind.

But the story of emerging technologies may be far more interesting than this, especially if we ask questions that have not been asked before. Why is it that this ‘fear and desire’ relationship that we have with technology seems to echo a similar ‘fear and desire’ relationship that we and our forebears have had with God, with the State and even with the large corporations of the Market? Do we have – or have our forebears had – a fear of these but also a desire that the power that causes this fear be brought to bear to create sympathetic conditions for us? A series of powerful protectors and providers? Is that not similar to the relationship we are increasingly having with the new technologies? If we can see some resonance here, doesn’t that change how we should think about technology? What further questions do we then need to be asking about how this relationship works?

Technology and the Trajectory of Myth answers these and other questions. It identifies the nature of the dynamic that drives this relationship and presents evidence to show that such a dynamic has long been in play, not just with the new technologies but similarly with those ‘magnitudes’ of Deity, State and Market. This evidence is found not only in the respective fields of those magnitudes but also in science, the legislative process and in law more generally. All this allows an argument that the magnitudes have formed a trajectory that has shadowed the history of the West from the start, a trajectory in which the new technologies are a key factor in the occupation of the space previously and sequentially occupied by those magnitudes.

This dynamic is proposed as a combination of psychology and history, which not only explains the relationship between individuals and the magnitudes across this trajectory but which argues that this relationship is strongly present today. The idea of it was drawn initially from the account of mythology presented by the German philosopher Hans Blumenberg but it has then been extended and widely re-worked. The result has been the imagining of this series of magnitudes as mythological entities, the purpose of which is to deal with the pressing and persistent existential fears and desires that all individuals experience. These magnitudes are claimed by their respective dominant interests to be not only absolutely empowered – they must be so to cope with the absolute nature of those existential experiences of individuals – but which have had that fearsomeness engaged to create sympathetic conditions for each individual.

The condition on which all this relies is the full subjection of the individual to the regime of idea and practice of each such magnitude in their respective eras. In fact, it is that subjection which fully empowers the magnitudes. The outcome is that, ironically perhaps, each absolute magnitude is ‘brought to earth’ by its conversion into a sympathetic form, with its power moving from absolute to conditional. The consequence of this loss of absolute status is then a search for a replacement absolute magnitude. These successive creations and failures – which see each magnitude descend into a field of failed but persistent magnitudes – constitute the trajectory. Within this field there are competitions and alliances as the dominant interests of each magnitude seek its re-emergence into an absolutely powerful condition. The operation of this field is a way to understand, for example, the contemporary alliance between the Market and both the State and emerging technologies.

This leads to the end point, the point of our present condition. That is, that technology can only take its place in this trajectory if it acquires an absolute form. We can see this emerging in the claims that technology will fully empower the individual as an Absolute Subject. Unlike the secondary position that the individual occupied in relation to the earlier magnitudes in their absolute condition, such an individual will be empowered to deal conclusively with her own existential fears and desires.

So we come back to the point at which we began. That is, the common view that technology should be seen as comprising contradictory utopian and dystopian features and that the former will be realised if the latter are eliminated or severely constrained. In fact, both features are together essential to this story of modern mythology. We need technology to be fully empowered – thereby fearsome – so that claims can be made that it will deal with the absolute existential condition of each of us. This to be done by the full power of technology in which we are to be embedded as Absolute Subject and by which each of us can create absolutely sympathetic conditions for ourselves. Utopia and dystopia need both to be brought into the context of the modern mythology not as contradictory elements but as working parts of the mythological dynamic.

But that is not the end of the story. As we have seen, the relationship between the individual and each of the magnitudes of the trajectory is based on a subjection which is best understood as the foregoing of responsibility for oneself. To recapture this self-responsibility – and experience the respect which accompanies it – means to reject this subjection. This in turn means opting out of the mythological way of organising both our sense of self and our social arrangements and dealing with existential concerns very differently, respectfully and in radical self-reliance.


About the Author

This article was produced by Elgar Blog, Edward Elgar Publishing‘s blog is a forum filled with debate, news, updates and views from our authors and their readership. see more.

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The Startup Odds of Raising V.C. Investment



We offer terms to 0.2% of the opportunities we see. The chances of raising VC investment are far lower than getting into that high school, top university or coveted corporate job. In fact, you have a 11.8% higher chance of getting into Harvard Business School.

While it may sound obvious, we want founders to beat those odds, but not to game them. By tracking “loss reasons”, we aim to provide insights into why we turn down opportunities and more importantly what founders can do to improve their odds of raising VC investment.

Key takeaways

  • Founders face a ‘differentiation challenge’, to set apart their company as a whole, as opposed to one or two isolated features.
  • Sizing up the addressable market determines a startup’s potential to deliver venture scale outcomes, so it’s important to do the maths.
  • Tech-push ideas are at greatest risk of not articulating a clear use case

At seed stage, the odds of a good founding team, with a fully tested product and early signs of traction would tend to be greater. At pre-seed, it’s a different ball game. For our monthly Office Hours (our main touchpoint with pre-seed founders), we receive ~150 applications per month, of which 10% get through to a 15-minute meeting and 1–2% progress. 4 out of 46 of our portfolio companies have now raised investment via Office Hours.

To help with the content we publish on The Path Forward, we track our “loss reasons” i.e. why applications don’t get through, of which the most common are outlined below:

There’s plenty of advice on The Path Forward on how to avoid these pitfalls:

Understand the “differentiation challenge”

Startups, by their very nature should offer something new and exciting. It therefore seems surprising that 32% (the highest number of opportunities) are lost because they fail to differentiate their offering versus what already exists. However, we appreciate it’s not easy to make a new product, vision or business model stand out, or indeed to build credibility in crowded markets.

Our guide to “evaluating your startup idea” provides a hands-on approach to testing whether founders have developed a differentiated product by putting it directly into the hands of customers. A particular challenge we observe from Office Hours submissions is the “feature trap”, where applicants pitch a new tool or a small tweak to existing solutions, but don’t have enough on which to build a differentiated business.

The founder’s ‘differentiation challenge’ is to set apart their company as a whole, as opposed to staking their future on one or two isolated features.

Markets that deliver “venture scale” outcomes

Many Office Hours applications pitch perfectly good businesses, which have every chance of succeeding by gaining traction in small, but limited market segments. These businesses often succeed with organic growth or raising investment from angels, whose cost of capital, (and required rate of return) is lower due to tax breaks and incentive schemes.

However, this article on the Equity Kicker explains why VCs must do the maths on the market and the potential exit outcomes when evaluating an investment. Due to VC fund economics (a subtle way of calling out the difficulty of predicting the success rate of startups), each investment we make must have the potential to return the entire fund back to our own investors (in Forward Partners’ case, that’s £60m). That means if we have a 10% stake, the exit value should be £600m or if we have a 25% stake it should be £240m.

Assuming this outcome is based on a 3–4x revenue multiple (£60-£80m revenue in the exit year), and the startup has captured 10% of a given market, the total size of the addressable market needs to be £600m+.

If founders are going after a large market (or starting with a small bridgehead before expanding into adjacent ones), it is equally important for founders to articulate the way in which their vision could deliver venture scale outcomes. This might involve setting out a clear plan on how to scale their marketing channels, or the unit economics behind achieving that kind of growth.

Fit with a VC’s investment strategy

Whether your startup is on / off strategy is a binary outcome (affecting 20% of all inbound). If a startup doesn’t fit with the fund’s focus or investment stage (9.7%), no matter how awesome it is, it’s unlikely to get a second look.

We have an article on getting to a first meeting with VCs, which explains how to target funds that are the best fit for your business. However, the best way to get a sense of a VC’s investment strategy is to look at their current portfolio or read thought pieces by their Managing Partner(s). For instance, Nic Brisbourne outlines Forward Partners’ investment strategy for Fund II here.

Similarly, it is important to pick the right VC targets. It makes no sense to send an application to a VC if you are too early (or in our case, more often too late) for their stage focus.

Articulate a crystal clear use case with proven pain points

Few applications (9.8%) are rejected on the basis of a poor use case, though this loss reason has been increasing over time. Cutting the data by “sector” or “category” suggests this correlates with our “Applied AI” investment strategy.

In areas such as artificial intelligence, there are many technologies looking for a problem to solve but it’s important to address a clear market pain point with the solution you have built. To help tech founders, we have a guide on identifying market applications for their technology, as well as more specifically for AI/machine learning startups.


About the Author

This article was written by  of the Path Forward. The Path Forward was developed by Forward Partners, a VC platform that invests in the best ideas and brilliant people. Forward Partners devised The Path Forward to help their founders validate their ideas, build a product, achieve traction, hire a team and raise follow on funding all in the space of 12 months. The Path Forward is a fantastic startup framework for you to utilise as an early stage founder or operator. The framework clearly defines startup creation as being comprised of three steps. The first step of this framework involves understanding customer’s needs.

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