Deal Dive: Tier and Dott’s Merger – A Complex Conundrum
Earlier this week, European micromobility companies Tier and Dott announced their agreement to merge. The companies, which specialize in on-demand rental of scooters and bikes, also revealed their plans to raise €60 million from existing investors and aim to finalize the deal in a mere two months. My colleague Romain reported that the companies have high hopes that collaboration will lead to profitability.
“This seems like a solid outcome for the two startups. It is highly unlikely that they would have attained IPO scale independently. In such circumstances, it is prudent to try a different approach,” stated Romain.
Last year, I formulated a theory about the M&A landscape for 2024, inspired by Getir’s acquisition of FreshDirect, for the purpose of bolstering its potential to achieve profitability. Although FreshDirect is not a startup, my conviction was that this year would witness a significant consolidation of startups that realized the advantages of joining forces with a kin startup: facilitating the achievement of scale and enhancing the appeal to potential buyers.
When I consulted some mergers and acquisitions lawyers to check if my hypothesis was consistent with their observations, they envisaged a rise in M&A undertakings in 2021. However, they were of the view that deals like the Tier and Dott merger would be few and far between.