With more than two decades of experience starting, scaling, selling, and investing in B2B businesses, Scaled Founder Simon Penson has seen hundreds of M&A processes from the inside – as a founder and as an advisor to ambitious scale-ups preparing for exit. Across that journey, he has observed a consistent pattern: many founders fundamentally misunderstand what makes an acquisition “strategic.”

There is often an assumption that strategic status comes from size, momentum, or hitting a certain revenue milestone. But in practice, strategic acquisitions follow a far more rational and predictable logic. Buyers across sectors behave in strikingly similar ways, and once their motivations are understood, it becomes easier to see why some companies trigger competitive interest while others struggle to spark a conversation.

According to Simon, one truth sits at the centre of every strategic deal: buyers pay for acceleration. A business becomes strategic when it helps an acquirer get somewhere in 12 months that would take them three years internally. Most of the motivations below link directly back to that principle.

Drawing on Simon’s experience in growth, M&A, and board-level advisory, here is how strategic buyers typically think.

1. Market Expansion – When Buyers Want Access More Than Revenue

One of the clearest motivations Simon has seen relates to market expansion. Ambitious groups, especially those backed by private equity, regularly acquire smaller businesses not for their revenue but for access: access to a vertical they haven’t cracked, access to a geography where they lack brand permission, or access to distribution they cannot quickly build themselves.

In many cases, a £3m-revenue specialist can command a stronger valuation than a £6m generalist. Buyers aren’t paying for the past 12 months; they’re avoiding three painful years of trying to replicate credibility from scratch.

2. Capability Gaps – When a Buyer Needs the Missing Piece

Many strategic acquisitions are driven by capability needs. Buyers identify a weakness that limits their commercial potential – and the target business holds the missing solution.

This may be:

  • A specialist service line,
  • A specific expertise or methodology,
  • Deep domain knowledge,
  • Or a technical capability they lack internally.

Simon has seen buyers prioritise capability so highly that financial contribution becomes secondary. They weren’t buying EBITDA; they were buying the ability to win deals they were currently losing. This is why niche specialists often command stronger multiples than well-rounded generalists.

3. Revenue Synergies – The Real Engine of Strategic Value

Founders often underestimate the importance of synergy modelling. Buyers care far less about what the target can do alone 0 and far more about what the combined commercial engine could deliver.

When Scaled has sat inside buyer-side strategy sessions, the conversation frequently turns to questions like:

  • Can this unlock cross-sell opportunities?
  • Will this improve CAC?
  • Does this strengthen positioning?
  • Does the combined offer accelerate revenue?

Strategic value rarely sits in year-one numbers. It sits in the uplift created when two engines connect, where 1+1 genuinely becomes 3.

4. Defensive Logic – The Motivation Few Buyers Admit Publicly

A less-discussed but powerful driver is defensive acquisition. Buyers sometimes move because they fear losing strategic ground – to a competitor, a fast-rising specialist, or an emerging disruptor.

Examples include:

  • A target that repeatedly beats them in pitches,
  • A company gaining traction in a vertical the buyer thought they owned,
  • Or a capability a competitor is likely to acquire first.

Simon has seen buyers act decisively when they believe the cost of not acquiring is greater than the cost of acquiring.

5. Strategic IP or Data – When the True Value Lies Beyond the P&L

A major shift in the last decade is the weight buyers now place on IP, data, workflows, automation, and proprietary methodologies.

These assets often:

  • Speed up delivery,
  • Improve accuracy,
  • Enhance client experience,
  • Or give the buyer a defensible moat.

In several deals Simon has observed, the financials were solid rather than spectacular – but the strategic data assets changed everything. When a buyer sees something that strengthens their entire ecosystem, the P&L becomes secondary.

How Buyers Decide Whether an Acquisition Is Truly Strategic

From the outside, M&A can look chaotic. From the inside, it is structured, rational and highly predictable.

In buyer-side strategy sessions Simon has contributed to, four questions repeatedly determine whether something is considered strategic:

1. Does this meaningfully accelerate our three-year vision?

If the acquisition collapses time, it becomes strategic.

2. Can we integrate it without jeopardising culture, margin, or delivery?

Strong operational foundations increase valuations; operational chaos destroys them.

3. Is the baseline business predictable enough to trust the upside?

Buyers pay for stability plus acceleration — not acceleration alone.

4. Can we clearly map where value creation comes from?

When synergy is quantifiable rather than theoretical, buyers stretch price.

How Founders Can Make Their Business Appear Strategic (Because It Never Happens Accidentally)

Across Scaled’s exit work, the companies that attract strong strategic interest share consistent traits:

They have a clear, respected point of view.

Not vague positioning, meaningful differentiation.

Their revenue is predictable.

Buyers reward governance, quality of earnings, and low volatility.

They have a functioning leadership team beyond the founder.

Buyer confidence rises when the business doesn’t depend on one person.

They can demonstrate synergy before the buyer asks.

Evidence beats theory every time.

They own something that scales inside a bigger machine.

Capabilities, IP, data, or processes that magnify value in a larger ecosystem.

These companies don’t wait to be discovered, buyers already know who they are.

Common Founder Misconceptions About “Being Strategic”

Simon consistently sees three blind spots:

Misconception 1: “Fast growth automatically makes us strategic.”

Buyers prefer predictable steady growth to erratic hyper-growth.

Misconception 2: “Strategic buyers will pay whatever it takes.”

They stretch only when synergy is near-term and visible.

Misconception 3: “We need to be bigger before anyone is interested.”

Fit matters far more than size.

The Bottom Line: A Strategic Acquisition Is About Who the Buyer Becomes

After years of working across exits and scale-up journeys, Simon’s perspective is clear:

A business becomes strategic when owning it makes the buyer stronger, faster, or more competitive.

The challenge for founders isn’t creating strategic value, most already have the ingredients. The challenge is making that value obvious, predictable, and easy for buyers to model.

When that happens, founders stop chasing buyers.
Buyers start chasing them.