The Premium Question
A recurring question in today's market is whether strategic buyers still pay premiums over market value when acquiring technological capabilities — deals where valuation is not directly correlated to revenue or profitability. This question often stems from nostalgia for post-COVID deal dynamics or regret over passing on offers during the bull market. With exit windows having shifted, VC-backed companies are searching for ways to justify valuations that compensate for their last post-money rounds.
The answer is yes, these non-correlated ARR deals still happen. But they do not come from transactional M&A processes. They happen by applying fundamental B2B sales principles to move M&A buyers through their internal decision-making journey.
The Board's Role in Premium Deals
Across nearly a decade in M&A, one constant has appeared in all strategic acquisitions: the leadership team needs board approval before making a deal. Boards operate under a duty of care, ensuring that transactions align with long-term strategy and that deal terms are fair and reasonable. Before discussing terms, a board's first priority is assessing how an acquisition compares against available alternatives — building internally or partnering.
The Awareness Framework
Understanding how corporate decision-making evolves is essential. Buyers move through distinct phases of awareness when considering an acquisition.
At the earliest stage, the company perceives no strategic gap requiring new capabilities. M&A is seen as purely opportunistic, and any proposed acquisition faces skepticism. As the company begins noticing market shifts or competitive threats, it enters a problem-aware phase where internal teams discuss capability gaps, though without urgency.
When leadership acknowledges that acquiring capabilities could accelerate market positioning, M&A becomes a considered option alongside building or partnering. The company actively weighs cost, speed, and risk across these alternatives. Only when a specific target gains internal support — with executives believing that delay could prove costly — does real momentum build. Competitive fears emerge, and the board becomes less price-sensitive while still demanding strong rationale.
At the highest level of awareness, the board is convinced that the acquisition is not merely an opportunity but a necessity. The opportunity cost of inaction outweighs price concerns, and leadership frames the deal as mission-critical for long-term success.
Practical Implications
Several key signals help gauge where a corporate buyer stands in their journey. If the corporate has not reached out, they are likely in the earliest phases, where relationship-building and exploring partnerships take priority. If they have reached out, pushing for a partnership first rather than rushing into an auction ensures the deal gets on the board's radar early rather than appearing as a sudden transaction that has never featured on their internal agenda.
A partnership-first approach creates internal alignment and board visibility before an acquisition decision is made. Boards that feel blindsided by a sudden auction process will likely push back, especially if the acquisition has never been on their radar.
The Lesson
Launching an auction too early often leads to rejection — not because the buyer lacks interest, but because their board has not moved far enough through the awareness journey to justify a premium acquisition. The most successful premium deals result from patiently guiding buyers from initial awareness through to conviction, ensuring full board alignment before formal negotiations begin.