Every business, whether it’s a scrappy startup or a multinational giant, must keep moving forward or risk falling behind. And when it comes to pushing forward, companies usually face a big question: Should they build something new on their own or buy it from someone else?
1. 60% of corporate innovation spending in the U.S. goes toward in-house R&D, while 40% is allocated to M&A
The innovation spending split
In the U.S., the majority of companies still lean toward in-house R&D when they want to innovate. Sixty percent of their innovation budgets go toward building things internally—hiring scientists, engineers, product designers, and launching research programs. But a substantial 40% is spent on M&A, which means buying innovation by acquiring startups or other companies.
This tells us one key thing: both strategies are important. But most companies still believe there’s more long-term value in building than buying. That doesn’t mean M&A is secondary—it’s just used differently.
What this means for your business
If you’re trying to figure out how to split your own innovation budget, this ratio can be a useful benchmark. But don’t just copy it blindly. Look at your strengths. Are you good at building products internally? Do you have the culture, talent, and patience for long-term R&D? Or are you better at spotting promising startups and integrating them into your company?
The 60/40 split works for many, but your industry, size, and growth goals might demand a different mix.
Takeaway advice
- Start with your core strengths: Do you have a capable R&D team already? If yes, build. If not, consider M&A.
- Use M&A to fill gaps fast—especially for technology, talent, or speed-to-market.
- Review your innovation spend every year. A fixed ratio isn’t always ideal.
2. Firms that acquire other companies for innovation see an average 30% faster time-to-market for new products compared to those relying solely on in-house R&D
Speed is everything
In today’s fast-paced world, getting your product to market quickly can mean the difference between being a leader and a follower. When you rely only on in-house R&D, you have to go through the full innovation cycle—idea, prototype, testing, development, and launch. That can take years.
But with M&A, you can often skip many of those steps. You’re buying a product, team, or technology that already exists. That’s why companies that focus on M&A get new products to market 30% faster on average.
What this means for your product roadmap
Speed doesn’t just help you beat competitors. It also helps you learn from customers faster. If you launch a new tech solution six months ahead of schedule, you can start gathering feedback, make improvements, and win loyalty while others are still working on prototypes.
But speed alone isn’t enough. The product you buy or integrate must fit your brand, customer base, and systems. Otherwise, it can lead to customer confusion or poor user experience.
Takeaway advice
- Use M&A when timing is crucial—such as catching a market trend or entering a new vertical.
- Always assess post-acquisition integration time. Speed to market depends on smooth execution after the deal.
- Don’t let internal pride slow you down. Sometimes, buying is smarter than building.
3. Companies that invest more than 50% of their innovation budget into M&A have 25% higher average revenue growth than those focusing on R&D
Growth often follows bold bets
Companies that put most of their innovation money into M&A grow faster—25% faster on average. That’s a big deal. It shows that acquiring innovation can drive top-line growth more reliably than internal R&D in some cases.
Why does this happen?
Because acquisitions often come with existing revenue streams, a proven customer base, and tested products. You’re not just buying potential—you’re buying performance. R&D, on the other hand, is about potential that may or may not turn into success.
What this means for your growth strategy
If you’re chasing fast revenue growth, M&A may be your best bet. This is especially true if you’re entering new markets or trying to diversify your product lines.
Of course, there’s a catch. Putting over 50% of your innovation spend into acquisitions requires serious due diligence, integration expertise, and a clear strategy. You can’t just buy companies and hope for the best.
Takeaway advice
- If growth is your number one goal, increase your M&A allocation strategically.
- Always look at whether an acquisition can contribute revenue quickly—avoid projects that require long retooling or rebranding.
- Balance is key. Too much M&A without internal innovation can weaken your culture and brand DNA.
4. 70% of large firms (revenues >$1B) use both M&A and in-house R&D as part of a dual innovation strategy
The best companies don’t choose—they combine
Most large firms don’t rely on just one strategy. Instead, they use both. They invest in in-house R&D to maintain a steady stream of proprietary innovation. At the same time, they acquire companies to accelerate growth, access new markets, or add new capabilities.
This dual strategy gives them flexibility. It allows them to build long-term and act short-term. And it reduces the risk of putting all their eggs in one basket.
What this means for your innovation playbook
You don’t need to pick one side. Even if you’re a small company, you can combine the two approaches. For example, you could build core products in-house and buy tools or plug-ins to enhance them. Or you could acquire a startup and use your own team to improve or scale their product.
The key is to align both strategies with your overall business goals. Don’t pursue M&A just because others are doing it. And don’t invest in R&D without a clear path to commercialization.
Takeaway advice
- Diversify your innovation strategy. Don’t rely only on internal teams or external deals.
- Make sure your R&D and M&A teams work together, not in silos.
- Set clear innovation KPIs for both strategies so you can measure ROI separately.
5. On average, it takes 3–5 years for an in-house R&D project to produce commercial outcomes
R&D takes time—and patience
Innovation doesn’t happen overnight. When you invest in internal R&D, you’re often signing up for a multi-year journey. It typically takes 3 to 5 years before you see real commercial results.
That’s because true R&D isn’t just about product development. It involves exploring new technologies, testing ideas, and dealing with trial and error. The path is full of uncertainty, but the payoff—when it comes—can be massive.
What this means for your timelines
If you’re planning to grow quickly, R&D alone may not cut it. You’ll need a parallel strategy to keep the revenue engine running while your internal teams build.
But if you’re playing the long game—building foundational tech, intellectual property, or defensible product advantages—then R&D is essential. Just make sure your investors, board, and leadership team are aligned with the longer timeline.
Takeaway advice
- Build a timeline buffer into all R&D projects. Don’t expect overnight returns.
- Use M&A as a way to stay agile while R&D projects mature.
- Set intermediate R&D milestones to track progress and avoid blind spending.
6. 55% of M&A-driven innovations are revenue-generating within 2 years of acquisition
Fast returns from acquired innovation
More than half of all innovation-focused acquisitions begin generating revenue within just two years. That’s impressive. When a company buys another to accelerate innovation, it’s not just buying potential—it’s often buying a product or service that is almost ready to go to market, or already there.
This stat highlights the financial appeal of M&A. While R&D often takes years to mature, M&A offers a quicker return. That doesn’t mean it’s easy, though. The company being acquired needs to fit well with your market, your systems, and your team.
What this means for your revenue strategy
If you’re under pressure to deliver short-term results or need a boost in top-line revenue, acquiring an innovation-ready company can be a strategic move. It lets you shortcut the development cycle. But it also puts pressure on integration, customer retention, and brand alignment.
If these elements are rushed or overlooked, the short-term revenue gains could vanish quickly.
Takeaway advice
- Prioritize acquisitions with existing customers, validated products, and clear paths to scale.
- Focus on integration planning early in the acquisition process—before the deal is closed.
- Monitor post-acquisition revenue monthly to ensure targets are on track.
7. The average ROI for M&A innovation deals is 12% higher than for in-house R&D projects over a 10-year horizon
The long-term value of strategic acquisitions
While R&D is often viewed as a high-risk, high-reward strategy, M&A deals focused on innovation tend to deliver stronger returns over the long haul. On average, they offer 12% higher ROI compared to internal R&D. That’s a significant difference over a decade.
This doesn’t mean in-house innovation isn’t valuable—it absolutely is. But M&A often brings with it an established product, working systems, and skilled people. That reduces the risk of failure and increases the likelihood of financial success.
What this means for investment planning
If you’re evaluating how to allocate your innovation capital, ROI should be a central part of the conversation. The key here is selectivity. Not every acquisition will deliver strong returns. But when done right—with thorough diligence and smart post-deal management—M&A can give your company a real edge.
R&D has its place, especially when you’re building something no one else has. But when it comes to predictable returns, M&A has a proven track record.
Takeaway advice
- Evaluate past M&A deals in your sector to benchmark expected ROI.
- Use financial modeling before every acquisition to project 10-year value.
- Blend M&A and R&D to balance quick wins and long-term differentiation.
8. 85% of biotech companies rely primarily on M&A to access new technologies and patents
Why biotech bets big on buying
In biotech, most innovation doesn’t happen inside big corporations—it starts in small labs, startups, and university spinoffs. That’s why 85% of biotech firms choose M&A as their main way to acquire innovation.
Building new drugs or therapies from scratch is time-consuming and expensive. It can take a decade or more to move from discovery to approval. So instead of doing all that work in-house, large biotech companies often let smaller firms handle early-stage research. Once a promising asset is identified, they step in and buy.
What this means for regulated or science-heavy industries
If your company is in a highly technical field—biotech, cleantech, advanced materials—this strategy might suit you too. Let startups do the early-stage experimentation. Focus your resources on commercialization, scaling, and market entry. That’s often where larger companies excel.
You don’t need to carry all the research risk. Instead, watch the ecosystem, build relationships, and be ready to move when something exciting appears.
Takeaway advice
- Track startup ecosystems relevant to your field—set up a pipeline of potential targets.
- Create a scouting team to identify early-stage breakthroughs that fit your strategy.
- Partner first, acquire later. Many successful biotech acquisitions start with collaborations.
9. 65% of firms report failed internal innovation initiatives as a key reason for shifting to M&A strategies
When internal innovation stalls
The reality is harsh: most internal innovation projects don’t deliver the expected results. Sixty-five percent of companies say past failures in R&D pushed them toward M&A.
This doesn’t mean R&D is a bad idea. It just means it’s hard. Projects get delayed, budgets get blown, and teams lose motivation. In contrast, M&A offers a cleaner path. You’re buying something that already works—or at least has proven traction.
This shift is more common in companies that have tried to innovate internally but struggled with speed, execution, or talent gaps.
What this means for shifting strategies
If your internal R&D is consistently missing targets, it’s time to look outside. That doesn’t mean shutting down your labs. It means complementing them with external innovation through partnerships or acquisitions.
It also means being honest about what’s not working. Too many companies continue to fund failing R&D projects because they’ve already invested so much. That’s a trap.
Takeaway advice
- Review your R&D track record honestly. What’s worked? What hasn’t? Why?
- Set a clear framework for when to shift focus from building to buying.
- Use M&A as a reset button when internal efforts hit a wall.
10. Companies in high-tech industries allocate, on average, 35% of their innovation spend to M&A
The M&A-tech connection
In high-tech industries—like software, semiconductors, robotics, and AI—companies invest about a third of their innovation budgets in M&A. That’s significant.
Tech evolves fast. By the time you build a product internally, the market may have already moved on. So instead of chasing trends with long R&D cycles, many tech companies buy startups that already have what they need.
This allows them to adapt faster, explore new spaces, and stay competitive in a market where speed matters more than ever.
What this means for tech-focused businesses
If you’re in tech, this stat should resonate. The bar for innovation is high. Customers expect constant improvement. Competitors appear out of nowhere. If you try to do everything in-house, you may fall behind.
That’s why building an M&A pipeline isn’t just a growth tactic—it’s a survival tool. But it has to be intentional. Random acquisitions won’t help. You need a clear strategy, target profiles, and a repeatable process.
Takeaway advice
- Allocate a defined portion of your innovation budget for acquisitions each year.
- Identify gaps in your roadmap that are better filled externally than internally.
- Build long-term relationships with venture firms, incubators, and accelerators for early access.
11. Only 30% of in-house R&D projects achieve full commercial success
The tough odds of internal innovation
Three out of every ten R&D projects hit the mark. The rest either get scrapped, stall out, or never reach their expected commercial potential. That’s a sobering reality for companies that put their faith—and budgets—into internal innovation.
This doesn’t mean R&D is a poor investment. It simply shows how complex innovation is. From ideation to execution, things can go wrong at any stage—tech may not work, customer needs may shift, or competitors may leapfrog you.
Still, the upside of success is often worth the risk. R&D can lead to proprietary breakthroughs that give you a long-term edge.
What this means for your innovation bets
Understanding the success rate forces you to approach R&D with discipline. You can’t afford to fund every idea that sounds exciting. You need a process that filters, tests, and validates concepts early—and kills bad ones quickly.
This also means setting realistic expectations. Not every project will become a hit, and that’s okay. The key is managing the portfolio so your winners cover your losses.
Takeaway advice
- Use stage-gate models to evaluate progress and manage R&D risk.
- Celebrate fast failures. They free up resources for better ideas.
- Track your own success rate and adjust funding criteria over time.
12. The average success rate of innovation-focused M&A deals is approximately 50%
M&A is no magic bullet
Buying innovation isn’t foolproof. About half of all innovation-focused M&A deals fail to deliver the expected value—either commercially, strategically, or culturally.
This puts M&A on slightly stronger footing than internal R&D in terms of success rate, but it still involves risk. Integration challenges, leadership clashes, and overestimated synergies can all derail even the most promising deal.
So while M&A may be faster and offer a clearer ROI path, it still needs precision and planning.
What this means for execution
You can’t treat M&A like a shortcut. It may skip product development, but it adds complexity in other ways—legal, financial, cultural, and operational.
The companies that succeed with M&A take the time to plan integrations, align goals, and put the right teams in place. They don’t stop working once the deal is signed—that’s when the real work begins.
Takeaway advice
- Build an integration team before the deal closes.
- Avoid overpaying for hype—look for fundamentals and cultural alignment.
- Post-deal, check progress every quarter with clear KPIs.
13. 80% of Fortune 500 companies use M&A as a fast-track to digital transformation
Digital needs speed—and scale
The majority of large companies know they can’t digitally transform using internal teams alone. That’s why 80% of Fortune 500 firms use M&A to speed up the shift to digital—whether it’s AI, cloud, automation, or data analytics.
Why? Because digital capabilities require specialized talent, tested platforms, and scalable solutions. Hiring a few engineers or launching a tech lab often isn’t enough. It’s faster to buy a company that’s already done the hard work.
What this means for transformation efforts
If your company is serious about digital transformation, M&A should be on your radar. You don’t need to build every capability from scratch. Focus your R&D on core differentiators, and use M&A to fill tech or data gaps.
But beware of digital theater. Buying tech companies won’t help unless you can integrate the tools, systems, and mindsets into your daily operations.
Takeaway advice
- Map your digital transformation goals—then identify which can be accelerated through acquisition.
- Post-acquisition, invest in change management to help teams adopt new systems.
- Avoid “tech for tech’s sake.” Focus on capabilities that serve clear business goals.
14. R&D-intensive firms spend 6–10% of revenue on innovation, compared to 3–5% for acquisition-led firms
Two paths, two budgets
Companies that rely on R&D typically spend more—up to 10% of revenue—because innovation takes time, talent, and repeated testing. Those that lean on acquisitions tend to spend less, partly because they’re buying something already validated.
This doesn’t mean one is cheaper or better—it depends on your business model. R&D-heavy firms like those in pharma or semiconductors have to build complex technologies in-house. Others, like many in retail or media, can grow faster by acquiring innovation.
What this means for your cost planning
Your innovation strategy directly impacts your budget. R&D is a long-term investment with high upfront costs. M&A, while potentially more efficient, often requires big one-time payments and carries hidden costs like integration or culture clash.
Whichever path you follow, your financial planning needs to reflect that choice.
Takeaway advice
- Forecast innovation costs based on your strategy—don’t rely on averages.
- Build flexibility into your budget to shift funds between R&D and M&A if needed.
- Watch your return on innovation spend, not just your investment size.
15. Cross-border M&A for innovation has increased by 60% over the past decade
Innovation without borders
Innovation is no longer local. In the last 10 years, cross-border acquisitions aimed at innovation have surged by 60%. That means companies are looking globally to buy new technologies, products, and talent.
There are two reasons for this. First, innovation hubs have emerged worldwide, not just in Silicon Valley or Berlin. Second, companies want to enter new markets and need local expertise to do so.
Buying a company in a new region gives you both—innovation and access.
What this means for global strategy
If your company wants to grow beyond its home turf, consider acquiring innovative firms in target regions. This lets you jumpstart your presence and gain localized insights.
But international deals bring added complexity—regulations, culture, legal frameworks, and customer expectations vary widely. You’ll need local advisors, strong legal support, and lots of planning.
Takeaway advice
- Identify global innovation clusters relevant to your industry.
- Use international M&A to open doors into new markets and customer bases.
- Don’t underestimate cultural differences. Build cross-border integration plans early.
16. 45% of innovation-driven acquisitions are in adjacent or unrelated industries
Innovation isn’t always found in your own backyard
Nearly half of all innovation-focused acquisitions are made outside a company’s core industry. That might sound strange at first—but it actually makes a lot of sense.
Why? Because real breakthroughs often come from crossing boundaries. A logistics company might acquire a data analytics firm. A car manufacturer might buy a battery startup. A retailer might buy a payments platform.
These “adjacent” or even “unrelated” acquisitions allow companies to tap into completely new ways of thinking—and often leapfrog competitors.
What this means for your innovation search
If you’re only looking at companies within your industry, you could be missing out. Sometimes, the real innovation you need has already been developed elsewhere—it just hasn’t been applied to your business yet.
That said, going outside your core space takes confidence and vision. You need to know what problem you’re trying to solve, and you need a clear integration plan.
Takeaway advice
- Keep a broad view when scouting for innovation. Don’t limit your search to direct competitors.
- Look for startups or firms that solve similar customer problems in different industries.
- When acquiring outside your field, ensure cultural alignment is strong—this reduces friction.
17. Companies that balance M&A and R&D equally are 1.8x more likely to outperform peers in long-term innovation success
The power of balance
When companies don’t rely too heavily on either M&A or R&D but instead use both, they tend to do better. In fact, they’re nearly twice as likely to outperform their peers in terms of innovation over the long run.
Why does this work?
Because it gives them range. R&D fuels original ideas and long-term IP. M&A adds speed, flexibility, and access to external talent. Together, they create a system that’s both stable and adaptable.
It’s like having a strong engine and a fast steering system—you can go far, and you can change direction when needed.
What this means for your innovation model
Rather than picking sides, your goal should be to create a system that combines the best of both worlds. Let your R&D team explore, test, and fail forward. At the same time, be ready to buy innovation that’s already been validated by the market.
This dual system also allows for better capital allocation. If R&D slows down, M&A can pick up the slack. If acquisition prices go too high, you can lean into building internally.
Takeaway advice
- Aim for a 50/50 innovation strategy as a starting point, then adjust based on your industry and stage.
- Create separate teams for R&D and M&A, but make sure they collaborate regularly.
- Track performance across both channels. Which is delivering better ROI? Which is moving faster?
18. Only 20% of firms report high integration success post-innovation M&A
Integration is the hidden challenge
You might think the hardest part of M&A is finding the right company or negotiating the deal. But that’s not the case. The hardest part, by far, is what comes after: integration.
Only 1 in 5 firms say they’ve successfully integrated their innovation-focused acquisitions. That’s a huge gap—and it explains why many deals fail to deliver their promised value.
What goes wrong? Often, it’s a mix of culture clashes, leadership turnover, unclear goals, and operational chaos. The acquired company may have brilliant ideas but struggle to plug into the larger organization.
What this means for your post-deal plans
Before you even sign the deal, you need an integration strategy. Who’s staying? Who’s leading? How will teams collaborate? How do systems sync up? How do you keep customers informed?
If these questions aren’t answered early, innovation can get lost in bureaucracy—or simply walk out the door.
Takeaway advice
- Start integration planning during the due diligence phase—not after.
- Keep the founders or product leaders of the acquired company involved in the transition.
- Set a 90-day post-acquisition roadmap. Make expectations, KPIs, and accountability crystal clear.
19. The average R&D-to-revenue ratio is 7% in pharma, but only 1.5% in consumer goods
Innovation intensity varies by industry
Some industries depend heavily on R&D. Pharma is a perfect example—with companies spending around 7% of their revenue on research and development. In contrast, consumer goods companies usually spend just 1.5%.
Why the difference?
Pharma products are complex, regulated, and based on long discovery cycles. Consumer goods, on the other hand, focus more on branding, distribution, and incremental improvements than on deep science or patents.
This shows that innovation doesn’t look the same across sectors. Your R&D budget should match the nature of your business, not industry averages from unrelated fields.
What this means for benchmarking
Before setting your R&D budget, look at your industry benchmarks. Spending more doesn’t always mean innovating better. The question is whether your R&D spend is aligned with how much innovation your industry truly demands.
If you’re in a low-R&D industry but trying to shift into tech or product-led growth, then yes—you’ll need to raise your ratio. But don’t force it where it doesn’t belong.
Takeaway advice
- Benchmark your R&D-to-revenue ratio against top-performing peers in your sector.
- If your ratio is far above or below industry norms, dig into the reasons.
- Don’t fall into “vanity R&D.” Every dollar should have a clear purpose or milestone.
20. 75% of venture-backed startup exits are through acquisition, fueling corporate innovation
Startups feed the innovation pipeline
Three out of four startups that raise venture capital eventually exit through acquisition—not IPOs. That means established companies are the main buyers of startup innovation. This trend is a goldmine for larger firms looking to accelerate their product or tech strategy.
Startups bring fresh ideas, fast execution, and a willingness to break the rules. When bigger companies acquire them, they gain access to all of that. And the startup gets scale, funding, and a bigger customer base.
This cycle—startups build, big companies buy—is a key driver of modern innovation.
What this means for opportunity scanning
If you’re looking for external innovation, keep your eyes on the startup world. Look at companies that have raised Series A or B funding. These are usually past the idea stage but still nimble enough to adapt.
Also, remember: many great acquisitions start with partnerships. Before buying, try collaborating. It gives both sides time to assess fit.
Takeaway advice
- Create a system to track and engage with venture-backed startups in your sector.
- Build relationships with VC firms, incubators, and accelerators to stay in the loop.
- Consider investing in startups before acquiring—it helps you test the waters.
21. 50% of executives say M&A is less risky than R&D when entering new markets
The risk trade-off
When executives look at the decision to enter a new market—whether it’s a region, a product category, or a tech platform—half of them say acquisitions feel safer than building from scratch. Why?
Because M&A gives you a running start. You’re not setting up new infrastructure or hoping customers will show up. You’re stepping into a business that’s already working, already earning, and already trusted in that space.
Compare that with launching an entirely new product or service, where failure rates are high and timelines long. The risk of spending years without returns looms large.
What this means for expansion
If you’re entering a new market, buying a company already operating in that space can dramatically reduce your ramp-up time. But remember—M&A might be less risky in terms of market entry, but it brings other types of risk like integration and cultural fit.
Still, if your team lacks specific market knowledge, or if speed is critical, acquiring may be your best bet.
Takeaway advice
- When evaluating new markets, compare the cost, timeline, and risk of building vs. buying.
- Factor in intangible risks like brand perception, local know-how, and customer trust.
- Don’t just buy revenue—buy insight. Look for companies with deep market understanding.
22. The average cost per successful innovation is 25% lower through M&A compared to in-house R&D
Cost efficiency through acquisition
While R&D is essential, it’s expensive—and often unpredictable. Many companies find that buying innovation through M&A actually reduces the cost per successful outcome by around 25%.
Why? Because with R&D, you fund a lot of failures to get a few hits. With M&A, you’re (ideally) buying only the winners. The innovation has already survived market validation, customer feedback, and development hurdles.
Of course, not every acquisition is a slam dunk. But when you’re disciplined about due diligence and integration, the math often favors buying over building.
What this means for budgeting
If you’re under pressure to reduce innovation costs while still delivering results, consider shifting more resources toward acquisitions. This doesn’t mean abandoning R&D. It means putting your money where the odds of success are higher—especially when you can spot and act on market-proven opportunities.
Think of M&A as a filter: someone else has done the early risk-taking, and now you get to scale what works.
Takeaway advice
- Analyze your historical cost per successful innovation project, and compare that to acquisition opportunities.
- Consider small or mid-sized acquisitions as a way to buy working products at a discount.
- Be selective—focus only on targets with real customer traction and clear paths to integration.
23. 68% of CFOs say they expect to increase innovation-focused M&A in the next three years
The financial outlook is shifting
Chief Financial Officers are seeing the value of buying innovation. Nearly seven in ten say they plan to increase M&A activity specifically aimed at driving innovation in the near future.
This signals a broader shift in how companies treat innovation—not just as a technical or product decision, but as a financial strategy. M&A is increasingly seen as a way to boost long-term value, enter growth markets, and increase competitive edge—all with more predictable budgeting.
It also means that finance teams are more involved in innovation decisions than ever before.
What this means for internal alignment
If you’re responsible for innovation—whether on the product, strategy, or corporate development side—you need finance on your side. They’re the ones controlling capital allocation. And now, they’re more open than ever to the M&A route.
So loop them in early. Frame innovation discussions not just in terms of “what’s cool,” but “what’s scalable, monetizable, and financially sound.”
Takeaway advice
- Work closely with your CFO or finance leads to align on innovation investment strategy.
- Present M&A opportunities with clear value drivers, risk mitigation plans, and ROI projections.
- Remember: innovation doesn’t live only in the lab. It also lives in the boardroom.
24. Only 28% of R&D investments in large corporations yield commercially viable products
The R&D success bottleneck
Less than a third of large-company R&D projects end up producing products that are commercially viable. That means 72% either fail completely, get shelved, or don’t generate enough customer interest to survive.
This stat reveals the hard truth about big-company innovation: it’s often slow, bureaucratic, and disconnected from real customer needs. It’s not about lack of effort—it’s about lack of focus and agility.
Sometimes, the R&D function is isolated from the market. Other times, projects get bogged down in internal politics or endless revisions.
What this means for R&D management
You need to be ruthless about trimming your innovation pipeline. Every R&D project should have a business case, customer insights, and a clear path to market. Without that, you’re burning cash and morale.
At the same time, don’t expect all projects to succeed. Instead, manage R&D like a portfolio—accepting that most won’t work, but a few will return outsized gains.
Takeaway advice
- Reevaluate your R&D governance. Are you funding science or building products?
- Set strict go/no-go criteria at every stage of the innovation lifecycle.
- Bridge the gap between R&D and customer teams—market alignment matters.
25. 40% of M&A deals are motivated by the acquisition of talent and IP (acqui-hiring)
People and ideas are the prize
Almost half of all M&A activity—especially in tech and digital industries—is driven by the need to acquire great teams and valuable intellectual property. This is often referred to as “acqui-hiring,” and it’s become a common tactic in the innovation playbook.
Why? Because talent is scarce. So are breakthrough ideas. If a startup has built something special, buying the whole company can be faster and more effective than trying to copy or hire one piece at a time.
It’s not just about what the company does—it’s about who they are and what they know.
What this means for talent strategy
If you’re struggling to hire top-tier innovation talent, M&A might be your most effective recruiting tool. But it has to be strategic. You’re not just buying resumes—you’re buying culture, mindset, and creative energy.
That means you need to give these people room to thrive post-acquisition. If you smother them in red tape, they’ll leave—and take the innovation with them.
Takeaway advice
- Identify gaps in your team that could be filled through acqui-hiring.
- Look for small companies or product teams with high creative output and clear IP.
- Post-deal, integrate lightly. Preserve autonomy while offering scale.
26. Firms with mature R&D capabilities are 3x more likely to succeed in post-merger integration
R&D maturity makes M&A smoother
When a company already has strong internal R&D processes in place, it’s much better equipped to absorb and scale innovation from an acquisition. In fact, such firms are three times more likely to succeed in post-merger integration.
Why does this happen?
Because innovation isn’t just about having new ideas. It’s about having the infrastructure, teams, and workflows to turn those ideas into results. Mature R&D systems already know how to test, refine, and commercialize concepts. So when something new comes in through a deal, they can plug it in and start working.
What this means for capability building
Before chasing the next acquisition, assess whether your organization has the capacity to make it work. If your R&D team is under-resourced, siloed, or unclear on priorities, a new innovation asset might only add confusion.
On the flip side, investing in R&D capability doesn’t just make internal projects better—it makes your whole innovation ecosystem stronger.
Takeaway advice
- Strengthen your R&D processes before expanding your M&A activity.
- Post-acquisition, assign your best R&D talent to integrate and scale the acquired IP or product.
- Create integration playbooks that combine technical onboarding with market launch plans.
27. 58% of companies cite speed-to-innovation as the top reason for pursuing M&A over R&D
Time is a competitive weapon
In over half of companies surveyed, the number one reason for choosing M&A instead of internal development was speed. When markets move quickly, customers evolve fast, and competitors don’t wait—speed becomes the difference between leading and lagging.
Building in-house is important, but it’s rarely fast. M&A, on the other hand, can deliver innovation that’s already been built, tested, and market-ready.
This isn’t just about reacting to trends. It’s about positioning your company to stay relevant and resilient in the face of constant change.
What this means for your innovation velocity
Think of M&A as a “fast lane” for innovation. Use it when the window of opportunity is short. For example, if a new customer expectation or technology appears and you need to respond in months—not years—acquisition gives you the edge.
But speed can’t come at the cost of clarity. Make sure you know exactly how an acquisition aligns with your vision, customer base, and tech stack before you hit go.
Takeaway advice
- Map innovation opportunities by urgency. Use M&A to fast-track urgent or time-sensitive needs.
- Ensure your M&A process is lean—slow dealmaking defeats the purpose.
- After acquisition, focus on rapid integration sprints—not slow handovers.
28. Companies that primarily innovate through M&A face 2x higher cultural integration challenges
Innovation cultures don’t always match
While M&A brings speed and external talent, it also creates friction—especially around culture. Companies that rely heavily on acquisition for innovation face twice as many cultural clashes post-merger.
Why? Because startups and large firms often work very differently. Founders are used to moving fast, breaking things, and staying lean. Big firms tend to have more structure, more process, and more politics. That disconnect can lead to frustration, attrition, and loss of the very creativity the company was hoping to acquire.
What this means for leadership
If you’re acquiring innovation-focused firms, culture must be part of your due diligence—not just finance and tech. You need to understand how the acquired team works, what motivates them, and how to keep their momentum alive after the deal.
Integration isn’t just about systems. It’s about people.
Takeaway advice
- Include cultural fit assessments in every M&A decision.
- Post-deal, retain the autonomy of acquired innovation teams where possible.
- Communicate early and often. Make the vision and benefits of the acquisition crystal clear to both sides.
29. Post-M&A product innovation rates increase by 15% within two years, on average
Innovation often accelerates after the deal
When done right, acquisitions don’t just plug in external products—they actually boost your internal innovation engine. On average, companies see a 15% increase in product innovation rates in the two years following a successful innovation-focused M&A deal.
This happens because of cross-pollination. New ideas, new teams, and new capabilities push existing employees to think differently. It can spark collaboration, fresh thinking, and faster development cycles.
So while M&A may start as a shortcut, it can become a long-term upgrade for your company’s creative potential.
What this means for post-deal planning
If you want to see this boost, you need to actively foster it. Encourage acquired and legacy teams to share knowledge. Create spaces—virtual or physical—where different groups can collaborate. Highlight early wins and reward teams that build together.
Innovation after M&A doesn’t happen by accident. It needs support and visibility.
Takeaway advice
- Track product release and innovation metrics both before and after each acquisition.
- Create integration programs that prioritize co-creation, not just assimilation.
- Host cross-functional innovation challenges to leverage new talent and tech.
30. 90% of tech companies over $500M in revenue have acquired at least one startup for innovation purposes in the past five years
Big tech buys to stay ahead
If you look at tech companies with more than $500 million in revenue, nearly all of them—nine out of ten—have acquired a startup in the past five years to drive innovation. This tells us something powerful: the fastest-growing, most future-focused companies don’t try to do everything themselves.
They scout early, move fast, and buy smart. They understand that in a digital world, staying relevant means being connected to the startup ecosystem.
And they treat acquisition as a strategic tool—not a last resort.
What this means for your roadmap
If you’re a mid-sized or growing tech company, follow this lead. Build a system for identifying, evaluating, and integrating startups that align with your goals. Don’t wait until a market shift forces your hand.
Acquisition isn’t just for giants. If done right, it can help you leap forward in a way R&D alone may not be able to.
Takeaway advice
- Make innovation-focused M&A a core part of your strategy—not an occasional experiment.
- Build a dedicated team to source and assess startup partnerships.
- Think like a startup scout: look for small firms solving big problems your customers care about.
Conclusion
This has been a deep dive into how companies choose to innovate—by building or by buying. As you’ve seen, there’s no one-size-fits-all answer.
Some companies excel at internal R&D, creating game-changing products from within. Others use M&A to gain speed, talent, and capabilities they can’t easily build. The most successful firms often do both.
