Opening scene from “The Seventh Seal” (1957) directed by Ingmar Bergman.

The Strategy of Mergers & Acquisitions

Ron Pragides
5 min readAug 3, 2015

Leading a company is similar to chess. Tactical moves on the chessboard are obvious; long-term strategy determines the winner.

As companies grow in scope and scale, they should consider Mergers and Acquisitions (M&A) as part of their corporate strategy. In my 20+ years in the technology industry, I have first-hand experience in a multitude of M&A situations:

  • at a hardware startup — being acquired by a large multinational
  • at a dot-com startup — operating through the merger of two companies
  • in an operational role — integrating with acquired teams
  • in a corporate development role — evaluating target startups
  • as an executive sponsor — identifying and closing of acquisitions

Having been on both sides of acquisitions, I’ve observed distinct patterns of successful strategies. This includes my most recent experience: 3 months have passed since Bigcommerce completed its first-ever acquisition. On this milestone, I’d like to share my thoughts on building a successful and consistent acquisition strategy.

What is Strategy?

Don’t begin with the question “What can I acquire?” That is a solution looking for a problem, and will lead to a schizophrenic targeting of your entire ecosystem. This is the exact opposite of a strategy. It’s the equivalent of scanning the entire chessboard for pieces to capture, without considering subsequent moves by you and your opponent.

A principled approach begins with defining your overarching corporate strategy. Where do you want to see the company in 1-year, 3-year, and 5-year increments? When developing this vision, consider all aspects of your company including:

  • product capabilities
  • market and brand positioning
  • team and technical competencies
  • sales and distribution channels

You should consider acquisitions only after you define the desired future state of your company. Set the destination of your company in 12/36/60 month increments. Then think about whether it’s best to build, buy, or partner your way to these desired outcomes.

Visualize how you want the chessboard to look. Work backwards to find your strategic moves. In some cases, buying a company may be the best move you can make.

Opening Moves.

Once you’ve defined your company strategy, you can begin to consider acquisitions as a way to reach your goals. However, acquisitions are not to be taken lightly. They take time to negotiate. They also come at a cost — both for the initial deal and for the follow-on investments that are likely needed.

Take an honest look at your company. Compare your current state with the desired state in your corporate strategy. What aspects of your business do you need to develop? Identify the biggest development opportunities and prioritize among them.

It’s important to find a product and/or team aligned with the desired trajectory of your company. This can take the form of capabilities that will take time to develop in a market you want to enter. During my tenure at Salesforce, we acquired a small knowledge base company in Paris. That deal and its subsequent integration laid the foundation of the Salesforce Communities product.

Aside from hard assets, also look closely at the team that you’re thinking of acquiring. They may have unique expertise that you can leverage. Find out what motivates them, and if that will continue once they join your organization. Observe their team interactions; look for strong cohesion and shared ownership. Learn about their values and beliefs for consistency with yours. You want to avoid “organ rejection” after the deal closes.

Once you’ve identified a potential fit, expectations need to be aligned between you and the target company. You won’t be able to strike a deal if you can’t agree with the target on valuation. Avoid an impasse by demonstrating clear synergy in a proposed acquisition. Solve for: 1 + 1 = 3.

In the daily operations of your company, it’s second nature to think of building capabilities from within. It takes discipline to also consider strategic acquisitions as a way to achieve your goals.

I’ve seen — both in myself and my competitors — how satisfaction can lead to a lack of vigilance, then to mistakes and missed opportunities.

— Garry Kasparov


Identifying the right team for acquisition is only the beginning of the process. You have to close the deal, which means convincing the target company that they should join your cause. Clearly articulate the potential of the combined team, and how much you can achieve together. Explain how their ambition as an independent company is consistent with the goals of a combined entity.

The deal has to make sense for both the target and the acquirer. It boils down to identifying synergy between the two companies. You’re asking the other company to cease independent operations; your shared mission has to be compelling.

While I was at Twitter, we identified the importance of continuous education of our engineering team. Our solution was to acquire a technical training company to create Twitter University — a training resource not just for our own staff but also for the community. This was a departure from the target company’s mission, but was compelling due to the broad impact we provided.

After completing the acquisition, the job of integrating the target company begins. This requires having a plan for all of the following:

  • how the acquired employees will report into your team
  • if the acquired product will continue to be sold
  • what to do with the customers of the acquired company
  • which aspects of the acquired technology will be used or rebuilt

Don’t think of an acquisition as a panacea. The work of integrating an acquired company can take anywhere from 3- to 6-months before you begin to realize any benefits. There will always be complications of either winding-down or transitioning the customers from the acquired business.

Also don’t forget that your moves are only part of the game. If you engage in an acquisition, you need to anticipate the moves and countermoves of your opponent. That is the art of strategy.

My opponents make good moves too. Sometimes I don’t take these things into consideration.

— Bobby Fischer


You can only evaluate success after the integration is complete. Only then will you know whether your calculations of expected value were correct. Has the acquisition resulted in new capabilities or time-to-market opportunities?

You’ll also begin to understand the human potential of the completed deal. Based on the early results from the team, decide if you should invest even more in this area. Are the acquired team members thriving as part of your organization?

After 3 months, I’m pleased to say that the first acquisition by Bigcommerce has been a success. We’ve expedited the development of crucial platform technology for integrating with key partners. We’ve also added great talent to our team. In fact, the acquired team members have become leaders within our company; we want to staff a team around them!

It’s a common belief that most acquisitions are not successful. The best way to tilt the odds in your favor: perform thorough due diligence on your acquisition targets. Don’t shy away from acquisitions. The best players think through all the possibilities.

If you wish to succeed, you must brave the risk of failure.

— Garry Kasparov



Ron Pragides

Led pre-IPO teams at @BigCommerce @Twitter @Salesforce. Follow me on twitter: @mrp