The M&A risk of confusing market velocity with marketing capability.
During the dot-com boom, an entire generation of technology marketers briefly concluded they were geniuses. Campaigns worked. Brands scaled overnight. Valuations soared on the back of market energy that felt, in every boardroom, like evidence of exceptional commercial skill. Then the Nasdaq peaked in March 2000 and shed 78 per cent of its value over the following 30 months, erasing roughly five trillion US dollars in market capitalisation. And in the wreckage, a quieter, more personally uncomfortable truth emerged: for many of those marketers, the product had been doing the work. The wave had been doing the surfing.
That lesson is overdue for a second reading.
M&A activity across cybersecurity, legal technology, data privacy and eDiscovery is running at levels not seen since the previous cycle’s peak. Estimates of combined AI capital expenditure for 2026 range from 440 billion to 700 billion US dollars. And in deal rooms from London to San Francisco, acquisition teams are repeating—with considerable enthusiasm—an error that has never actually gone away: confusing the velocity of a market with the capability of the organisation moving through it.
The distinction matters because it is, at its core, a problem of physics. Think of organisational momentum as mass multiplied by velocity. Mass is the structural substance that gives motion real force: governance frameworks, documented operational controls, defensible data infrastructure, and marketing capabilities that generate demand independent of what a product happens to be at any given moment. Velocity is everything visible from outside: brand awareness, analyst mentions, inbound pipeline, conference buzz. The dangerous deal is the one where velocity is high, mass is low, and no one on the team paused long enough to ask why the velocity existed in the first place.
Marc Andreessen wrote in 2007 what remains one of the most cited documents in technology investing: in a genuinely strong market facing a real unsolved problem, “the market pulls product out of the start-up.” Andy Rachleff, who originated the product-market fit concept, put it more bluntly still: “You know you have fit if your product grows exponentially with no marketing.” The implication for deal teams is uncomfortable. When a technology solves a problem that is acute, widespread, and underserved by existing alternatives, the market does not wait for a campaign. It moves toward the solution with a force that looks, from outside, exactly like excellent marketing. It is not. It is gravity. And gravity, unlike marketing, does not require a budget, a team, or a strategy.
The noise of early adopters
The gravity problem compounds when deal teams misread whose attention the product is actually attracting. Geoffrey Moore’s technology adoption lifecycle, building on Everett Rogers’ diffusion research, places innovators and early adopters at less than 16 per cent of any market—and fundamentally different in motivation from the pragmatist majority whose purchases constitute sustainable enterprise demand. In technology markets, early adopters are frequently the practitioners with the deepest understanding of the problem the technology solves. They are also, in most enterprise contexts, not the people controlling procurement.
Edelman-LinkedIn research found that 71 per cent of decision-makers say less than half of the thought leadership they consume provides valuable insights. Even when content resonates, it does not reliably translate into commercial behaviour. A vocal cluster of enthusiastic practitioners can generate market-presence metrics indistinguishable from validated enterprise demand. They are not the same thing. Separating the two is the due diligence work most deal teams skip, because the combined signal is convincing and the time pressure to move quickly is real.
The problem has a face
In most technology companies operating in specialist markets, one or two individuals have become the human embodiment of both the innovation and the market’s response to it. The founder who can explain the technology’s implications with an authenticity no marketing team can replicate. The subject-matter expert whose practitioner standing gives the product’s claims institutional credibility with exactly the early-adopter community generating all that visible velocity.
Around 47 per cent of key employees leave within one year of an acquisition, according to widely cited analysis. When the individual who departs is the one whose technical authority was indistinguishable from the company’s brand identity, the velocity does not slow gradually. It stops. The technology continues to exist inside the acquirer’s platform. The gravity that made the market care about it follows the person out the door.
The structural remedy is not simply a retention package. It is a formal separation, during due diligence, of what the technology can do from what the person can communicate about what the technology can do—and an honest accounting of what demand generation looks like if that person is absent within 18 months.
Shooting stars, durable orbits
The most dangerous acquisition target in any technology cycle looks most like the thing acquirers want to buy. Its awareness is real. Its practitioner credibility is real. Its demand generation results are real. And all of it is being produced by a technology that found its market at the right moment, in a field with insufficient competition, generating gravity that everyone in the room is reading as organisational capability.
Contrast this with a company operating for eight or nine years. Its conference presence is quieter—it is no longer the newest thing in the room. Its revenue growth is modest but unbroken. Its customer-retention numbers are exceptional. It has reference accounts inside the most risk-averse organisations in its sector, not because it generated extraordinary marketing momentum, but because it solved a real problem consistently and well for a long time, in a space where being trusted matters more than being new.
Research on digital M&A during hype phases confirms that deals executed at peak cycle generate lower post-acquisition returns, driven by deal teams incorporating excessively optimistic expectations into their valuations. The mechanism is consistent: the acquirer sees the demand, reads it as marketing capability, and prices accordingly. Eighteen months after close, in an integration meeting, the marketing velocity has normalised and the governance infrastructure turns out to have been considerably thinner than the pipeline dashboard implied.
The single most practical discipline a deal team can apply: insist on seeing an 18-to-24-month marketing and revenue timeline—not a snapshot, but a longitudinal record—before accepting any category-leader claim. If every significant acceleration in market presence correlates tightly with a product release date rather than compounding independently, the marketing function is not generating velocity. The technology is. Price it as a technology asset with a defined novelty window, not as a brand with compounding equity. Those two assets have very different durability profiles—and very different post-close trajectories.
The press release for the next acquisition will describe the target’s market presence, technology leadership, and growth trajectory. None of those descriptions will be wrong. The question is whether they describe momentum—sustained, governed, capable of surviving the departure of the individuals who built it—or a moment captured in the data at exactly the right price, at exactly the wrong time.
History does not repeat. But it does remind. And the reminder, this time, is arriving on schedule.
Read the complete article at The M&A Risk of Confusing Market Velocity with Marketing Capability and check out the marketing capability checklist at M&A Marketing Capability Checklist: Is Your Target’s Momentum Real or Borrowed?
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