Why Do Big Companies Buy Small Companies?

Big companies buy small companies because small companies are simply better at innovation than larger companies. Employees of a big company do not want to be seen as trying out a new idea and then abandoning the venture midstream if it does not work. The career of managers wishing to move up the corporate ladder do not want to have failures in their history. Now the world of innovations is such where small companies develop new products and services, gather early customers at high cost, and then sell the business to a large company. These large companies can use their existing distribution and/or manufacturing organization to turn the company bought into a large profitable business.

Employees of a big company do not want to be seen as trying out something and then abandoning the ventures midstream if they are not working out as expected.

Should Your Company Be Valued Based On Financials Or Strategic Value?

Many entrepreneurs view the value of their company as being tied to generating revenue and profit growth, but fail to appreciate how this view limits their ability to fully exploit their company’s potential. The key to the strategic value is having developed a product which has the potential to reach a very high level of sales, if it is given the proper resources. A… Continue reading →