Over the years more than a few clients have worked hard to bring new (or improved) technologies to market only to find that tons of dollars later, the market has shifted and recovering sunk costs will be difficult or impossible. And what to do next is not easy either.
Having been on the sell / joint venture side repeatedly, I am sensitive to the precursors that are often present within these companies when they began the growth planning process.
The desire to start from scratch, or very near the beginning is common. Not invented here is a cultural force that shows up regularly.
On the buy side, both for learning and growth, I see the wisdom of looking at a large pool of sell side companies that are doing the thing you are planning. It has worked for our clients to be an acquirer. The process, executed well, helps with low risk growth (at least some presence in the market place) and to learn about:
- overall condition of the market
- condition of the industry players
- current and potential technology changes
- wisdom of the crowd (things rarely made known without the gatherings of a broad net of information)
The arguments I’ve encountered against this type of investigation have been interesting – not successful, just interesting.
One CEO told me directly that he had been in the industry all of his life and that he knew the players and market variables (without asking anyone).
My thought at the time, was of Lord Calvin’s 19th century quotes that” there is just nothing new to be discovered” (in physics) and “heavier than air flying machines are impossible”.
Everyone knows something. If you ask enough questions, the better answers appear. Markets are almost always more complicated than they appear. Knowing where the rocks are takes fore sight that we are not born with.
Acquiring an existing business in the space you are entering guarantees relationships, perhaps physical/intellectual assets, and if done right, the kind of talent you need and a real start in the market (and the wisdom of other people’s mistakes).
As in the rest of life, getting started is the hardest thing to do (my own hindsight).
Tell us your stories, comments, insights…