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M&A is a powerful tools for growth, allowing companies to scale rapidly, acquire talent, enter new markets, or diversify their product offerings. However, M&A is also notoriously challenging, filled with complexities that go far beyond simple financial considerations.
In today’s rapidly evolving business landscape, the strategic value of M&A lies not just in the transactions themselves but in the underlying approaches that ensure successful outcomes. In this article, Henry Ward, CEO at Carta, shares his strategic perspective on M&A and the evolving landscape of corporate acquisitions.
“A lot of opportunities might not be immediately seen as unbound. Part of the acquirer's job is to recognize potential that others might not see and understand how it could become unbounded.” - Henry Ward
Proactive M&A
One of the hardest parts of M&A is creating actionability. In private markets, inertia is often a massive barrier to getting deals done. Just because a company or asset is on your radar doesn’t mean the other party is ready—or even interested—in selling.
Henry highlights the importance of identifying decision-makers and stakeholders and building a case that matters to them. Often, the company you’re targeting won’t create that case for themselves unless they are actively trying to sell. This means you must build the rationale for them, considering not just the economic benefit but also the personal motivations of key decision-makers.
For example, understanding how the deal will make the COO look good in front of their CEO, or how a chief of staff might be incentivized to back a deal, could unlock the pathway to actionability. This people-centric approach often trumps pure financial logic, particularly in private markets.
Building relationships
Successful M&A isn’t just about numbers. It’s about people—especially when dealing with startups or founder-led companies. Henry reveals how, in many cases, the founder is the most valuable asset. Without their buy-in, even the best financial offers might fall flat.
One strategic approach is to shift the conversation away from price and focus on vision. Instead of opening with a financial offer, CEOs should start by asking founders about their long-term goals and career aspirations. Are they passionate about building products but bogged down by operational headaches? Do they see a future in scaling their company, or would they benefit from the support of a larger organization?
By building rapport and aligning on the future vision, financial negotiations become secondary. Founders need to feel that they are making a move that aligns with their personal goals—not just their company’s valuation.
Valuation Strategies
Valuation is often seen as the crux of any M&A deal, but it’s a more nuanced process than simply multiplying revenue by a number. Henry sheds light on how both science and art come into play during valuation.
On the one hand, the “science” of M&A valuation involves looking at public market comps, calculating revenue multiples, and factoring in growth rates. On the other hand, the “art” comes in when companies consider strategic value, scarcity, or even the long-term potential of an acquisition.
For instance, the idea of paying a premium for a high-growth company is often justified by its scarcity or potential market dominance.
However, the importance of understanding what you’re truly paying for is crucial. If you’re acquiring a company with a growth rate far higher than your own, you must factor in how that company’s stock and future earnings will align with your overall portfolio.
Focus on Integration
Many companies focus so much on closing the deal that they overlook the integration phase—arguably the most critical determinant of success. Henry emphasizes that successful integration is about much more than logistical tasks; it’s about preparing the acquired team for their new roles and ensuring smooth cultural transitions.
One of the strategies shared is involving key leaders from the acquiring company early in the process. Before the deal closes, sales, product, and engineering leaders should meet their counterparts from the target company to set clear expectations. This human element reduces uncertainty and increases retention—particularly for employees who may be wary of the acquisition.
Moreover, Corp Dev teams must be responsible for both closing the deal and managing integration. This accountability ensures that the team who structured the deal has a vested interest in making it work long-term.
Balancing Bounded vs. Unbounded Acquisitions
Henry introduces the concept of “bounded” versus “unbounded” acquisitions, highlighting two strategic approaches. Bounded acquisitions are those with a clear financial runway and manageable risk—typical of private equity-style deals. Unbounded acquisitions, on the other hand, have the potential for nonlinear growth but come with significantly higher risk.
Companies should strike a balance between these two types of acquisitions. While disciplined acquisitions (singles and doubles) are essential for stable growth, it’s the home-run deals that can truly transform a company’s trajectory. Recognizing when to take a calculated risk on an unbounded target is a critical skill for any successful Corp Dev team.