Consolidation can be complicated
Earlier this week, European micromobility companies Tier and Dott said they had agreed to merge. The companies, which offer scooters and bikes to rent, also plan to raise €60 million from some of their existing investors and plan to close the deal within two months. The companies hope they can become profitable if they work together, my colleague Romain reported.
This seems like a solid outcome for the two startups, since they likely weren’t going to reach IPO scale on their own. After all, if the companies weren’t going to survive as solo entities, it makes sense to at least try another direction.
Last year I came up with a hypothesis about M&A in 2024; I was inspired by Getir acquiring FreshDirect to fill a gap it needed to potentially reach profitability. While FreshDirect isn’t a startup, my hypothesis was that we’d see a lot of consolidation this year as startups realized they would have a much better chance of reaching scale — or be more attractive to potential acquirers — if they teamed up with another similar startup.
I ran my hypothesis by some M&A lawyers to see if it aligned with what they were seeing, and while they expect M&A activity to increase this year, they actually think deals like the one between Tier and Dott will be few and far between.
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