The combination matrix

Sometimes the best pre-sale move is an acquisition of your own.

The idea

Sometimes the best pre-sale move is an acquisition of your own.

Two businesses combined can be worth more than the sum, because size moves multiples and because a combination can add a capability that changes the category.

The question is whether the combination is provable to a buyer and executable before the exit.

You sell once. They buy for a living.

Every sale of a founder-led business is a negotiation between a first-timer and a professional. Each chapter of the playbook closes part of that gap.

Read the asymmetry

The figure

Lift against integration risk

LowIntegration riskHigh

Do it if the numbers work

The same trade in an adjacent geography. It moves you up the size staircase.

What to do Model the combined multiple; structure it with seller paper.

The premium play

Target

A specialist capability with higher margins that re-categorizes the combined business.

What to do Acquire or merge eighteen months or more before the exit, so the combined trailing numbers are clean.

Skip

Scale without lift, and hard to integrate.

What to do Sell separately.

Partner first

The capability is real, but integration is uncertain.

What to do A joint venture or a subcontract pilot; convert it to a combination only if it works.

Adds scale onlyStrategic liftAdds a capability or changes the category

How to read it

A potential combination with another business is judged by how much strategic lift it adds (horizontal) and how risky it would be to integrate (vertical). The best combinations add a new capability with low integration risk, and are done well before an exit.

The three P’s