Benefits of Merging Before a Crisis

The GCC market is small if we compare it with big economy like USA , China & EU , and with so many similar projects, we keep seeing the same problems. Many young entrepreneurs and business owners face challenges like closures or piling debts. The main issue, in my view, is the lack of a culture of mergers and acquisitions (M&A). Imagine this: What if 20 café owners came together, instead of each one struggling alone, and merged their efforts under one strong brand? What could happen? The Benefits: 1. Economy of Scale: • Buying raw materials in bulk saves money. • Operations become simpler and more efficient. 2. Lower Costs: • Instead of paying for separate rents and expenses, they share costs. • One big marketing campaign is more effective than many small ones. 3. Stronger Brand: • Single big brand builds trust faster and gets recognized quicker. 4. Go Public: • Larger, stronger company can list on the stock market and attract big investors. 5. Better Competitiveness: • Unified business can take on bigger players in the local and regional markets. How Can We Start? 1. Spread Awareness: Host workshops with business chambers to show the benefits of M&A , Invite experts to share successful M&A stories. 2. Test Small: Start with a small group of cafés or businesses to try merging and see the results. 3. Government Support: Introduce laws that make merging easier and offer incentives to businesses that merge. 4. Create Funds: Set up investment funds to guide and support mergers. 5: Show Success Stories: Highlight a successful merger to inspire others. Example: In Japan, many small cafés were struggling to compete with Starbucks. The founder of Tully’s Coffee, who was also struggling, decided to merge with other local cafés. Together, they built a $40 billion business that became a serious competitor. Conclusion: The idea of mergers and acquisitions could solve many problems for entrepreneurs in the GCC. It could even help create a unified Gulf brand that competes on a global scale. Let’s face it: working together is always stronger than working alone. What’s the best way to encourage young entrepreneurs in the GCC to adopt this idea?

Your man**l processes work fine. Until they suddenly don't. At 20 customers, man**lly updating three systems isn't terrible. At 50 customers, it's annoying but manageable. At 100 customers, someone is spending their entire day on data entry. At 200 customers, errors are everywhere and customers are complaining. Man**l processes don't degrade gracefully. They collapse suddenly. One day everything is fine. The next day, nothing works and you're in crisis mode trying to figure out how to handle the volume. Smart businesses integrate before they hit the breaking point. They automate data flows when it's still a minor inconvenience instead of waiting until it becomes a major crisis. Because implementing integration during a crisis is much harder than implementing it during calm periods. You have time to test properly. You have patience for the learning curve. You have bandwidth to train the team. You have space to optimize the workflows. Crisis integration is emergency surgery. Preventive integration is routine maintenance. Which would you prefer to experience? Scale breaks man**l processes eventually. The only question is whether you'll be ready when it happens.

In the contemporary Nigeria startup scene, we have two distinct periods: before and after the floating of Naira. Before the Naira floating policy was put in place, growth capital from foreign investors was in abundance. But after the initiative, everything has dried up as the deterioration of Naira has decimated asset values, discouraging most foreign venture capitalists to put money in Nigerian startups. The implication has been consequential as many startups are running out of cash even when they’re growing Naira revenue. So, what do some startups do? They just shut down. Today, I have a message: do not shutdown, simply explore how to merge. Nigeria will be back because nations rarely kaput. The old landscape of vibrant startup ecosystem will return very soon. So, despite some of these current challenges, there is no need for these premature closures. Simply, rather than succumbing to these capital pressures and shutting down, a strategic pivot towards mergers presents a compelling alternative, allowing founders to preserve value, leverage combined strengths, and navigate the complex market more effectively. And that means someone must give up a CEO title to become a CTO or CPO or whatever. There is nothing bad there. Merging offers a lifeline by consolidating resources, expanding market reach, and fostering shared expertise. It enables startups facing similar hurdles to pool talent, technology, and customer bases, creating a more robust entity with enhanced resilience. This collaborative approach not only mitigates the risk of individual failure but also positions the merged entity for greater innovation and sustainable growth, transforming potential shutdowns into opportunities for collective success. Finally, if you are planning to shut down, before you do that, Tekedia Capital would like to have a conversation with the founders. We have developed a framework we’re using with our startups and that is working. We understand the long gestation period to profitability in Nigeria, and the necessity of working capital. Sure, and we also note that Nigeria has many great things which could be unlocked right now. In short, the velocity of moving capital has significantly improved and that is one thing a merged and stronger startup can build upon. Look at the flanks and you will notice that mindless shutdown over just working capital could be managed with strategic mergers https://lnkd.in/e9s_mv43