The Benefits of Merging a Mid-Market Firm With a Startup

Business leaders have used a variety of strategies in recent months to generate cost efficiencies and remain competitive, including splitting into separate companies and relocating headquarters outside the U.S. But one that hasn’t gotten as much play, but can be equally as lucrative, is merging with a nimble, entrepreneurially-minded company. Adding new thinkers to your wheelhouse can provide pivotal advantages for both sides, including experience and resources—financial and otherwise—for the smaller firm, and innovation, imagination and possibly a faster time to market for your organization.

“Adding new thinkers to your wheelhouse can provide pivotal advantages for both sides.”

Leading this pack and providing case studies to learn from is the consumer packaged goods industry. Overall growth in the sector, especially in western markets, has slowed, forcing big food, beverage and health- and housewares companies to scout for solutions. In this arena, large companies have been chasing and swallowing startups for several years already, and the trend is becoming more prominent as chief continue to look for competitive alternatives.

One of the biggest splashes in this regard was by Campbell Soup which, struggling with stagnation in its primary market of ready-to-eat soup, reached out to snap up two of the most sterling small enterprises in better-for-you foods: Bolthouse Farm and Plum Organics. CEO Denise Morrison has applied essentially the same strategy to each acquisition—allowing the companies to run autonomously and keep doing what they did best, gaining sales and even share in fast-growing markets, while also weaving relationships with the larger company in areas  ranging from product development to distribution.

This is a strategy that could prove very beneficial for companies in manufacturing, pharmaceuticals, technology, even automotive and engineering.

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Dale Buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.

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