Will 2023 be the year of corporate zombie marriages? With a recession looming and investors suddenly reluctant to fund unprofitable companies, cash-strapped private startups, recent technology initial public offerings, and former special-purpose acquisition companies They will try to save their bodies by merging with other startups.
Partnering with another loss-making young firm may seem like an unlikely path to salvation. However, such deals could provide an inexpensive way for the acquirer to increase market share or gain economies of scale. Meanwhile, the target receives cash to keep the lights on. However, mergers are no substitute for cost cutting and sound unit economics. Nor can you fix a broken business model.