A critical component of the entrepreneurial ecosystem in the U.S. is the mergers and acquisitions market. I’ve sifted through a number of studies and estimates, and it’s safe to say that the vast majority (over 90 percent) of the successful private company exits in 2011 and 2012 have been through company sale or M&A. (IPOs may represent a higher percentage of VC-backed company exits, but remember that only a minuscule proportion of all startups – even successful ones – are funded by VCs.)
What makes the M&A “engine” run, in a real sense, is the creative and innovative people on the big-company side of the fence who are constantly scanning the market for promising [...]
The inability of established firms to come up with breakthrough innovations is a truism today. It wasn’t always so. Joseph Schumpeter, the 20th century economist known for heralding the role of innovation in the evolution of society, argued that established firms were best positioned to innovate because of the resources available to them. Edith Penrose, one of the most prominent management thinkers of the 20th century, agreed.
It was the modern combination of internet and venture capital that changed people’s minds, by opening up a new source of breakthrough innovation: high-growth startup companies. With their appetites for high risks and returns, and no legacy systems or [...]
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