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value: john warrillow

Over the past year, Google has bought a company every two weeks, doubling its stated goal of 12 acquisitions annually and tripling its deal flow compared with the previous 12 months.

In each case, the acquisitions have been "strategic" rather than "financial." In fact, many large companies are looking to acquisitions as a means of supplementing feeble sales from existing customers.

As a business owner, your most attractive exit option is arguably a strategic sale of your business to a larger company. Strategic buyers are typically willing to pay more for your business than financial buyers (such as private equity companies) because they have assets that can increase the value of your company and theirs. Strategic buyers have deeper pockets than your management team or next of kin, which make them more generous acquirers than your managers or kids.

Here are four reasons big companies buy little ones:

1. To sell your product to their customers

First Research creates cheat sheets for salespeople who want to sound smart when they call a new customer in an industry they are unfamiliar with. Dun & Bradstreet has hundreds of thousands of customers buying sales leads from its Hoovers division, so it was willing to pay $22.5-million to Bobby Martin and his partners so that D&B could sell First Research industry profiles to Hoovers' customers. If only a fraction of Hoovers' customers bite, the deal will pay off for D&B.

2. To get your technology to make one of their products better

Google paid $25-million for DocVerse because it had built a better way for users to share documents. By swallowing DocVerse, Google is accelerating the adoption of its Google Docs platform.

3. To get hold of your smartest employees

Sterling Cooper got acquired because of the creative genius of Donald Draper. While the players are fictional in the case of the hit TV series Mad Men, big service companies often buy smaller ones for the people.

4. To get a new place to sell their stuff

Bell Canada bought The Source last year to add 756 new stores to sell retail consumers phones, TVs and Internet access.

When I sold my last business, I was in discussions with three strategic acquirers, most of which were at the table because they could see how our product could be sold to their customers.

If you want to sell your business to a big company, the trick is to explain to an acquirer how the combination of the two companies is worth more than the individual companies on their own.

Special to The Globe and Mail

John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He writes a blog about building a valuable – sellable – company. Follow him on Twitter @JohnWarrillow.