June 2, 2022

The secret to startup M&A strategy? You need to know about the 48-hour rule

More and more startups are looking at acquisitions as a strategy for growth, but what do you need to know to nail your M&A strategy?

Mads Fosselius

5 min read

Dixa cofounder Mads Fosselius

More and more startups in Europe are looking to acquisitions as a strategy for growth. But when it comes to startup M&A strategy, buying and integrating smaller companies is never as simple as it seems. 

Our first acquisition was Australian knowledge platform Elevio in 2021 — 16,000km from our HQ in Copenhagen — before we acquired French customer intelligence AI startup Miuros and German customer automation AI platform Solvemate. We could have built these capabilities over time, but to scale quickly we needed to enrich our team with talented, enthusiastic people, integrate new technology into our platform and expand our addressable market. 

Here are our top three M&A strategy takeaways from 12 months in “acquisition mode”. 

Startup M&A strategy 1: Empower the founders as your new 'cofounders'

You need to listen closely to the needs and concerns of the leaders in the companies being acquired. For their founders, it’s a time of mixed emotions: they’re proud of how far they have taken and grown their company, but also anxious about what the future holds. The founders of Elevio, Miuros and Solvemate were naturally concerned about whether Dixa was the right cultural fit for their people, and how the news would be received. 


They were also wondering what would happen to their products: would we continue to develop and improve them, and help their existing customers?

By having an extremely thorough due diligence process, we've done a lot to mitigate these concerns and to make sure we benefit from the inspiration, talent and knowledge within the wider founding teams. We’ve made sure all founders are engaged in strategic roles across our focus areas of people, product and profit in order to help steer the process in the right direction.

A top priority for any acquiring founder needs to be incentivising other founders to stay on board, ensuring they're motivated to step into important and impactful roles immediately and can see a clear pathway ahead as individuals as well as for their company. 

The real M&A strategy challenge begins on the first day following the merger

One way we do this is through a joint “founders forum” that offers all founders a regular opportunity to meet and input directly into strategy and vision, and to discuss challenges. We meet four times annually — twice in person and twice virtually — and have monthly 1:1s and ad hoc catch-ups. This has made a huge difference already, and Dixa continues to benefit from the combined cultural and directional leadership from all founders, ensuring the lines of communication between us have remained open, transparent and unfiltered. 

Startup M&A strategy 2: The 48-hour rule

The real M&A strategy challenge begins on the first day following the merger. You need to ensure that the wider team understands the new vision and is also keen to be part of the journey.

In the first 48 hours following our recent double acquisition I took a core team of department senior leaders from our people & culture, product, engineering, commercial and strategy teams, and flew them between Geneva, Lyon, Berlin, Amsterdam and Copenhagen.

As CEO it’s your role to ensure that all parties feel included within the new structure and quickly connect with people in person in a meaningful way. The purpose was to quickly humanise the M&A process while giving the teams in the companies we were acquiring an opportunity to ask questions to the leadership team in person. 

We refer to this as “the 48-hour rule”. It’s an idea rooted in Scandinavian culture: act fast to execute a successful merger by forming in-person, human connections with one another from day one. Without this, you risk alienating the employees and talent you have acquired and creating an “us against them”, fragmented workforce. 

Startup M&A strategy 3: Be outward-looking from day one

My final M&A strategy lesson is more specific to my company’s roots in Denmark, and why I think we are often successful at acquiring and effectively integrating companies. 

The Danish people share a “born global” mentality with the country’s success stories like Unity, Trustpilot and Pleo, despite our relatively small domestic market. We’re forced to look beyond borders from day one, which forces an outward-looking mindset upon a company. It also means we’re more receptive to acquiring other startups to drive growth and innovation.


But that shouldn’t discourage you from also focusing on your domestic market.

I often ask entrepreneurs to picture [their venture as] a beautiful swan swimming in a lake — but underneath the surface, the water is usually a little more turbulent, chaotic and unknown

In our case, we began with a global mindset, yet simultaneously placed emphasis on retaining distinct Scandinavian values such as the Danish "hygge" — a concept that revolves around the feeling of friendship and wellbeing — that plays out in our company culture. Importantly, we experience the world differently compared with our French, German or British counterparts, who can gain impressive traction without ever leaving their backyard.

Ask yourself if you have a clear understanding of the local culture in the markets you’re expanding into. If there are gaps in your understanding, secure trusted advisers in the markets you’re interested in early on while consistently tying everything back to a clear vision for your company. 

The truth about romantic startup growth stories

There are a lot of romantic versions of startup growth stories. When I hear them, I often ask entrepreneurs to picture a beautiful swan swimming in a lake. This is the vision we all have for our ventures at the outset — but underneath the surface, the water is usually a little more turbulent, chaotic and unknown.

The same logic applies to startup M&A strategy. It’s a fast track to accelerated growth, but the real challenge lies in keeping the waters calm following a merger, tackling the unknown and handling the challenges while leveraging the opportunities.

To unlock the true potential of a startup acquisition you need to align visions, listen to new teams and take a fluid approach to culture. At the same time, each company’s founders need to be deeply involved in the process of creating a shared mission, strategy and leadership team.  

Mads Fosselius is the cofounder and CEO of Dixa. 

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