You should have a member of the corporate development, product, or business development teams (depending on your organizational structure and resources) develop an M&A road map. That individual should get input on that road map from (i) key hiring managers on the types of people or teams they would most like to acquire, (ii) product and engineering leaders on product road map holes, and (iii) the executive team on key “big picture” strategic buys the company should consider.
If I were to imagine the M&A road map at Facebook circa 2012, it speculatively may have looked something like this:
- Hiring M&A. Facebook needs to build out its mobile team, and is being pressured by Wall Street to increase its ad business. Therefore, we should buy teams of 3–10 people with strong backgrounds in (1) mobile engineering/product/design or (2) advertising products. Teams will be broken up and added to the areas of greatest hiring need. We should also buy machine learning or data science heavy teams as we can not hire enough of them.
- Product M&A. Buy Snaptu to enable mobile clients in LATAM/ASIAPAC, an email-scraping company to help with international growth efforts, and an IM-focused team to reposition for Messenger.
- Strategic M&A. Build relationships with founders of the top five social apps on mobile and the web. Set up quarterly 1:1s for Zuck to meet with the CEOs of WhatsApp, Instagram, Pinterest, Twitter, and Weibo. Determine when to pull the trigger and make a bid on each.
Building your M&A road map is a crucial first step. Next, we’ll take a look at how to assess what your prospective acquisitions are worth—so you can move forward on an offer.
General considerations when buying a company
- Can we absorb a team of this size without screwing up our culture?
- What will the org chart and reporting structure be?
- Will the leadership of the team we buy have an impact more broadly in our company? Are there areas we are struggling with that the incoming entrepreneur can own?