Combine & Conquer - Real World Wisdom - Go Big in M&A. Small Deals Don't Help

There is a certain comfort in doing small-sized acquisitions, especially for companies that have just started their inorganic journey. And yes, there are tangible advantages to this approach.

Lower purchase consideration. A smaller cheque is more palatable to the management and the board, and therefore easier to get buy-in for.

Simpler acquisition processes. Smaller targets are unlikely to run extensive auctions with a large number of interested buyers, multiple rounds of bidding, and so on. As a buyer, a simpler process means fewer things to do and fewer hoops to jump through.

Negotiation leverage in favour of the buyer. A larger buyer can use its heft, resources, and time or runway to its advantage against a smaller target.

Manageable risks. The quantum and number of business risks associated with a small target company will be lower than with a larger one, so if those risks do materialize, there is less fallout for the buyer to deal with.

An easier post-merger path. With a smaller scale of operations and headcount, integration tends to be faster and smoother.

But M&A Isn't Like Any Other Decision You Make

M&A can be transformative in ways that organic initiatives can never quite deliver on. It can help you gain scale and market leadership overnight, reduce competitive intensity, get you access to disruptive technology or new markets, and, importantly, pre-empt threats and disruption to your business. An organic-only approach will cost you time, and the outcome is never guaranteed. In fast-growing businesses like tech, where disruption is the only constant, M&A is pretty much your only lever against that slide into irrelevance.

So adopt M&A and use it to its true potential. Smaller deals might be easier to execute, but they also deliver limited benefit to your business. And then there's the opportunity cost: smaller deals might be a bit faster to execute, but not by much. Larger deals, while they look riskier because of their size and deal value, will deliver meaningful scale and benefit. That's what you actually need, not a portfolio of small acquisitions and years spent testing the M&A waters.

Why Companies End Up With a Portfolio of Small Deals Anyway

The reality, though, is that even companies with the capital and the skill to execute larger deals often end up building a portfolio of smaller acquisitions instead. This is usually the outcome of management trying to balance external pressure, like competitors doing M&A and the need to respond, against internal reticence from the board, shareholders, and so on.

And predictably, this kind of half-hearted M&A doesn't really deliver the benefits it should. In fact, the most common outcome of such a portfolio is that most of these acquisitions get wound down soon enough. To make matters worse, while a company is busy scooping up small-ticket deals, the scaled-up targets end up in the hands of competitors instead. It's a double whammy, maybe even a triple whammy, because the conclusion people tend to draw from all this is simply that M&A does not work.

So What Should You Actually Do?

Don't mistake activity for strategy. A string of small acquisitions can feel like progress: deals are closing, the M&A muscle is being exercised, the board sees movement. But if none of those deals move the needle on scale, market position, or capability, you haven't built an M&A strategy. You've built a distraction.

The fix isn't to avoid small deals altogether. There's a legitimate place for them, typically as a way to acquire a specific capability, team, or technology that's genuinely hard to build organically. But that's a tactical use of M&A, not a strategy for it. If small deals are your default rather than your exception, it's worth asking honestly: is this discipline, or is this avoidance?

Larger deals are harder to pull off. They're harder to get board buy-in for, harder to diligence, harder to integrate, and harder to be wrong about in public. But that difficulty is precisely why they matter more. The CEOs who build real advantage through M&A are the ones willing to make that harder call, put real capital behind it, and see it through, not the ones who accumulate a drawer full of small deals that quietly get wound down two years later.

The market doesn't reward effort. It rewards outcomes. Go big, be bold.

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