Merging can be complicated
Earlier this weekEuropean small-haul companies Tier and Dott said they had agreed to merge. The companies, which offer scooters and bikes for rent, also plan to raise €60 million from some of their existing investors and plan to close the deal within two months. My colleague Roman reports that companies hope they can make a profit if they work together.
This seems like a strong result for the two startups, given that they likely won’t reach the IPO level on their own. After all, if companies cannot survive as single entities, it at least makes sense to try another direction.
Last year I came up with a hypothesis about mergers and acquisitions in 2024; Getir’s acquisition of FreshDirect inspired me to fill the gap I needed to achieve profitability. Although FreshDirect is not a startup, my hypothesis was that we would see a lot of consolidation this year as startups realized that they would have a much better chance of reaching scale — or being more attractive to potential acquirers — if they teamed up with another startup. Similar run.
I’ve run my hypothesis by some M&A lawyers to see if it lines up with what they’re seeing, and while they expect M&A activity to increase this year, they actually believe deals like the one between Tier and Dott will be few and far between.