Understanding Acquisitions in the Tech Industry

Over the course of my career I’ve acquired 10 startups. Here’s what I’ve learned 1. Most acquisitions fail This might sound strange coming from someone who’s done it ten times, but acquiring a company is usually a bad idea. Not because of bad strategy or flawed products, but because of what happens after the deal: integration. You’re taking two teams that barely know each other and expecting them to merge cultures, workflows, and goals. It’s speed dating that ends in marriage, and we all know how that usually goes. If you’re not obsessively thinking about integration from day one, you’re setting yourself up to fail. 2. Write your own acquisition playbook, and keep rewriting At Fiverr, every time we’ve made an acquisition, we’ve refined our internal “playbook.” It starts well before any deal is on the table: identifying potential targets, opening conversations and building trust over time. We don’t sit around waiting for the perfect opportunity to fall into our lap. Instead, we proactively map out companies that interest us and start a dialogue, not always with the intention to buy, but often just to get to know great founders and build meaningful relationships. That groundwork makes a huge difference if and when the timing is right. 3. Never acquire based on short-term opportunity Every acquisition must make long-term strategic sense. It has to align with our mission and deliver real acceleration. You can clone almost any product. What you can’t clone is product–market fit and the people who made it happen. A great acquisition brings you both and gives you a serious competitive edge. 4. People matter more than anything This part is non-negotiable. In tech, human capital is everything. You’re not just acquiring IP, you’re betting on the team that made it work. We look for founders and teams who share our belief in democratizing talent and opportunity. People who want to empower creatives, builders, and entrepreneurs, just like we do. Because from the moment the deal is done, Fiverr belongs to them as much as they belong to Fiverr. If they don’t connect with our reason for existing, nothing else matters. 5. Skin in the game drives alignment Equity is the most valuable thing a public company can offer, more than cash, because it represents belief in future upside. Some avoid using equity in acquisitions for exactly that reason. I take the opposite view. Most deals tie founders to short-term targets: hit your KPIs in two or three years, then cash out. But when someone joins Fiverr, they’re not just running their old business under a new logo. They’re part of the company now, and their incentives should reflect that, not just success in their unit, but success for Fiverr as a whole. Shared skin in the game builds real alignment and a stronger company over time. When you get these right, When you truly believe that 1+1 can equal way more than 2, M&A becomes one of the most powerful tools for inorganic growth.

Did you know that 68% of M&A deals destroy shareholder value? Picture this: Late one night, I'm reviewing a major tech acquisition. Traditional DCF shows $533M. Seems bulletproof. But something doesn't feel right. I run it through our machine learning model, trained on 1,400 historical deals. The algorithm flashes red: $460M maximum value. $73 million difference. That's not a rounding error - that's shareholder wealth at stake. Here's the fascinating part: The ML model wasn't just spitting out numbers. It had detected subtle patterns from hundreds of similar deals that humans often miss: - Market cycle timing - Industry-specific multiples - Hidden correlation factors - Post-merger integration success rates This revelation transformed how I approach valuations. Instead of treating DCF as gospel, I now use ML as a sophisticated "reality check" - like having 1,400 experienced dealmakers looking over your shoulder. The key insight? ML doesn't replace financial expertise - it amplifies it. It catches blind spots before they become costly mistakes. It pressure-tests assumptions against real-world outcomes. Most importantly, it forces us to ask the hard questions: 1. What market signals are we missing? 2. Are our growth assumptions supported by historical patterns? 3. Which valuation methods have proven most reliable for similar deals? I've seen several institutions' deal success rates improve by ~20% using this dual approach on particularly complex deals. Here's my challenge to you: On your next valuation, what if you supplemented traditional methods with ML validation? What hidden insights might you uncover?

Recently, I was surprised by a Fortune 50 CEO's excitement about a seemingly tiny acquisition. During our private conversation, he spent a good ten minutes explaining the recent acquisition: a small business with less than $100 million in revenue, in a geography that did not seem especially significant to his company. At first glance, this appeared to be a minor deal for a company with a market cap of over $300 billion. What really stood out to me was the CEO’s perspective: “You have no idea how much we are going to learn from them.” This acquisition was not about topline growth, margin expansion, or market share gains. This was about learning! Learning from a thriving, tech-enabled, innovative, high-growth business that this CEO knew would teach his company valuable lessons in an area they had not fully explored. It made me think: How often do leaders view acquisitions purely through the lens of scale, cost or revenue synergies, or entry into new markets/sectors?  As the market becomes more complex, and especially as more established businesses navigate changes related to emerging technology, I expect more executives to approach corporate development (acquisitions, JVs, partnership) as learning opportunities - ways to explore new capabilities, gather new insights, and test new models. It’s a good reminder that, sometimes, growth is not just about numbers - it can also be about a company’s ability to innovate, learn, and adapt.