Why acquisitions fail
A year ago, I sold my company for $20 million to a bigger player in our space. It felt like a solid move at the time. We had a 12% net profit margin on a decently large scale and a customer base that kept coming back. Growth was steady at 9% yoy and for me, it was proof the five years I’d put in paid off.
Now, 10 months later, I hear it’s been losing money. Same team, same tech, same market - no big shifts I can point to. But the profit’s gone, and they’re burning cash instead of making it. I don’t have the inside scoop, but something’s clearly off.
It’s tough to see as a founder. I’ve stepped away - it’s not my fight anymore - but watching a business I built struggle still hits me. I spent years getting the pricing right, keeping overhead tight, making sure customers stuck around. Handing it over felt good until this.
My mentor put it best: “The detachment’s rational. The hurt’s human.”
I’ve even thought about buying it back. Not out of some big sentimental thing - just frustration. How does something that ran so well for so long flip like that? It’s not just numbers; it’s the instincts and relationships you build over time. We just saw this play out - Sirona and Good Glam went the same way recently. Good businesses acquired, then run into the ground.
To founders, exits are a mixed bag - you get the check, but you lose the reins. To acquirers, it’s not plug-and-play; what you buy doesn’t just keep humming without care. And to the team still there, I’m sorry it’s turned out like this. You guys deserved better.
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Acquisitions are not just about acquiring a company.
There needs to be a well thought out plan as to why it’s being done -
- For employees
- For product
- For users/ network effects
And then most importantly how the integration is to be done in the existing system. That’s where it fails majority of times
You mean you sold your company for 1,247 crores INR? You must be kidding buddy!
Please don’t think of buying it out of frustration. It’s just another way to satisfy your ego.
I will buy it if I get it back for lower than I got bought for - the upside is unrealised and I’ll do it if they don’t.
It’s not about ego - it’s just a business decision plus passion.
Acquisitions in large companies are most likely pet projects for some “leaders” there. Once done they move on to the next money burner. They got their bonus.
I have seen this repeatedly in all large companies I have worked with.
So which things attract that money burner people.
So i can build that type of startup one day.
What did you do with the 20mn$
Build something new, grow it more, new domain , new tech , new space, I am sure you will pull it off.
