From my understanding, the most successful way for a smaller company to acquire a larger one is through a leveraged buy-out. This means the smaller company will have to take on considerable amount of debt for this to be successful. For this decision to make sense, the smaller company has to have huge confidence in the value this larger company will have (strategically) in the hopes of higher returns in the future.
From the sell-side (i.e the larger company’s perspective), the smaller company has to have significant value that it brings to it. This could be in the form of new technology, patents, existing relationships, etc. which the larger company lacks and sees as being crucial to its survival.