Playing the “Right” M&A Game

DealMaking Intel #35

Jun 23, 2025

Hi, it’s Thomas from Positive Capital. I'm helping tech entrepreneurs increasing the odds and speed of an M&A transaction.

Deal Making Intel is an insider playbook about M&A Deal Making. Today, I'm unpacking the core principles that govern the game of M&A.

In M&A, there’s no such thing as a “fair” valuation — only the valuation we can negotiate. And to negotiate, we first need to play the game of bringing, at least, one people across the table.

The general game of M&A follows a clear progression:

Generating interest to get on the radar of potential buyers.
Building intent by giving those buyers a reason to move into an evaluation mode.
Creating urgency to push them into action — so they enter into an evaluation mode to take a seat at the negotiation table.

But getting a buyer to enter evaluation mode is no small feat. It demands a substantial internal commitment — financial modeling, due diligence planning, product and market analysis, stakeholder alignment, and often external advisors.

Buyers don’t engage at this depth unless they believe the opportunity is worth the effort. It’s costly, time-consuming, and politically risky — which is why most deals are filtered out before this stage.

That’s why there isn’t one M&A game. There are many. Each with its own unique set of rules, and as Kyle Harrisson framed it in its one of its most popular essay — Playing Different (Stupider) Game:

In the world of building and investing in companies, there are a LOT of different games at play. The only way to avoid finding yourself playing a stupider game is to look around and understand the games that everyone else is playing. And adjust accordingly.

I see too many sub-scale (<€10M ARR) B2B SaaS companies trying to play the same M&A game as mature companies — relying on process-driven urgency, manufactured FOMO, and banker-led sprints — without realizing they need to play a completely different game.

The M&A game a company must play to get buyers into evaluation mode depends entirely on which buyers it can realistically address. Mature companies can engage financial buyers, particularly private equity (PE) funds, whose mandate is to acquire.

These buyers are accustomed to structured processes, exclusivity deadlines, and competitive tension. In fact, they often prefer it — it gives them clarity, speed, and a defined path to closing.

For mature companies with scale and predictability, getting PE firms into evaluation mode is relatively straightforward. But sub-scale companies don’t have that luxury. Most PE firms won’t engage because these businesses lack the profitability and predictability required to be evaluated as standalone platforms.

So sub-scale companies are often left with one main path: strategic buyers. But getting a strategic into evaluation mode is an entirely different story.

Unlike a PE fund that can move fast with clear mandates, strategics deliberate, revise, and sometimes back away even after months of discussion.
Even if one executive champions the deal, they must convince the rest of the organization that it makes sense strategically, operationally, and financially. Product, finance, legal, go-to-market, and sometimes even HR all weigh in, because each function will be impacted post-acquisition.
The champion has to “spend” political capital to push the deal forward — and that only happens when there is deep conviction, not casual interest. And even with strong strategic logic, it won’t move forward if it’s not in the planning cycle or if another initiative is prioritized internally.

It’s a hard, slow, and risky process. That’s why strategic buyers rarely mobilize for targets that won’t materially improve revenue growth or operating margin within the current fiscal year. And that’s where relative size becomes critical.

In my experience:

A target below €3M ARR is typically seen as a distraction for a €15M+ ARR buyer.
Below €5M ARR is noise for a €50M+ ARR company.
And below €10M ARR won’t move the needle for a €100M+ platform.

The smaller the target relative to the buyer, the harder it is to build intent — convincing the acquirer that allocating resources to a non-material opportunity is worth it.

This is why banker-led sprints rarely work for sub-scale companies. These tactics assume intent already exists and just needs to be accelerated. But when buyers haven’t built conviction, pushing for urgency often backfires.

As I’ve written before, boards at strategic buyers tend to push back when their leadership team is suddenly drawn into an auction for a “must-have” deal that appeared out of nowhere and hadn’t been discussed internally.

In my experience, intent is far more effectively built in a pre-emptive context — when a buyer is given space to explore the opportunity outside the pressure of competition. That sense of exclusivity is a powerful psychological lever. But that’s a story for another day.

Good luck!