How do you find the right balance between keeping a small and innovative start-up / software independent enough to keep thriving while still lifting the synergies and reducing the overhead/operational cost by fully integrating them?
Indeed, there is a delicate balance to achieve between giving the target’s management sufficient autonomy while pushing them to realize synergies (i.e. cutting cost) post the acquisition. One suggestion would be to put in place a proper management incentive plan for the key leadership of the target company (the startup in your case), which comes with both financial and operational goals in a 3-5 year horizon. At the same time, the acquirer company can demonstrate its support to strengthen the business of the target company by channeling resources and allowing the target to leverage its infrastructure to accelerate the progress (i.e. helping the management of the target company to achieve its goals so that they are entitled to the incentive payouts). This would help to align interest between the target company and the acquirer, while pushing the target’s management team sufficiently hard to perform the necessary ‘cost cutting’ to achieve the desired synergies.