Venture capital-backed startups (a term I use for high-growth private companies, particularly in the technology sector) are being acquired much earlier by corporate enterprises, which can offer scale to these entrepreneurs and who are looking to expand the way they grow new products and services.

Most larger companies, through their corporate development units, operate a mixed economy, where they balance the greater certainty of organic growth and its longer-term horizon with the benefits of inorganic growth, namely an earlier starter position, and – probably – a more excellent innovation.

There has been a lot written about how value can be destroyed by acquiring businesses. Some argue that if you’re clear about what drives the value, then acquisitions create value when they improve long-term cash flows. However start-ups are not bought necessarily for the financial value they have.

Entrepreneurs have the greatest insight into how a particular market is developing, they think differently and see things that others don’t. They feel compelled to to create something that doesn’t exist. Sometimes that’s blind faith, which leads to catastrophe. But more frequently, it’s great insight which is harnessed into a step change in how an industry operates.

If a company acquires that asset of the entrepreneur’s insight and innovation, then they can lead in that industry breakthrough. Repeatedly, we see that the benefits of market disruption and dislocation accrue to the number one and two players who embrace it.

It is common to refer to Google as a media firm today. Its founders entered a crowded market with better technology. Their unfair advantage was applying that better technology, specifically search algorithms, to the aggregration of audiences.

They figured their business model out later. Since going public in August 2004, they have become one of the largest media companies on earth. That’s something that occurred by taking a different approach and adding different technology to media.

Part of why corporates buy start-ups is to add new DNA to the corporate gene pool and introduce a new way of thinking into how they operate. Sometimes there is massive organ rejection by the body, but there have been hugely successful cases. In the best of these, the start-up culture has positively affected the corporate culture as well.

So is the buyer typically disadvantaged in an M&A process? Pretty much, as the information asymmetry is such that there is a fundamental disequilibrium. The best way to offset this is to ‘date before getting married.’

Not surprisingly, some of the healthiest acquisitions have stemmed from successful business development leading to the larger company wanting to own the start-up. The longer and better you understand the asset, the better you can assess the value.

There are more ways to get some of the right and new DNA in your firm if you are running an established enterprise. Acquiring firms will always carry the risk of information asymmetry.

Google apparently acquired YouTube in five days. It’s easy to look at the price and the timeframe and see how that worked in the founders of YouTube’s favour.

So it’s important to stay radically open to small change which indicates that major disruptions are happening in the market. You can become obsolete faster than you know.

Partnering, investing and acquiring have always been part of the corporate toolkit, but derivatives of each, blended models and an overall speed in the market mean that a

corporate executive can never take anything for granted. Neither his current market position, nor his next year’s forecasts.

Julie Meyer is the CEO of Ariadne Capital, a London-based investment and advisory firm.

Find out more at www.ariadnecapital.com