A mini wave of French acquisitions?

Dec 14, 2011
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A while ago, I published an article titled “I’m sorry, did you think French companies don’t acquire?” Despite the fact that France lacks a company with an aggressive acquisition strategy comparable to that of Google, there ARE companies that acquire. At the time, my list was oriented towards larger companies – like Ubisoft, France Telecom and the likes. But all of a sudden, it’s teeny tiny French startups that seem have an interest in buying one another.

6 startups now 3 companies.

In the last few weeks, I’ve heard about several smaller-scale acquisitions that have all been the result of a French startup acquiring another company. First was French Birchbox equivalent, Joliebox, that announced the acquisition of UK competitor Boudoir Privé. I admit that it’s a rather impressive story, considering that both companies have been around for less than a year. Then, Augure, a French ERM company (that I used to work for), announced that it had swallowed up Spain-based Imente. And yesterday, Ykone, a French social fashion startup (that came out of the Sciences Po incubator!) announced that it was acquiring Hypeed. As these are all smaller-scale acquisitions, none of the financial details of the deals were released. But it is definitely a little hint that the French startup scene is potentially on its way to maturing.

Yo Eric, why hasn’t Google acquired a French startup?

Funny enough, Eric Schmidt addressed why Google hadn’t acquired a French company at last week’s LeWeb event in Paris. Eric responded to the question by referring to the new Google office in Paris and mentioning that Google would be strengthening it’s Paris presence and be looking into local acquisitions. Great, wonderful. Definitely having a local M&A team would help the cause. But many US companies casually gloss over French companies when it comes to acquiring, not just Google. Surely it doesn’t require a local team to acquire, does it? Funny enough, I had recently had a conversation with an entrepreneur from a high-profile US company that mentioned that the company never even looked at French-based companies for acquisitions because of the labor laws (unfortunately I cannot publish more details). Tellmewhere founder Gilles Barbier also commented on Twitter saying that a potential acquisition hadn’t gone  through for similar reasons.

 

Fire me, baby.

I’ve always been surprised at how much people misjudge the French labor laws. In the US, people were always throwing the 35 hour work week, 6 week vacations and strikes in my face – as if that was your standard French company. Ok, yes, vacation is a bit more generous in France than in the US – but is not really that different from the rest of Europe (25 days in the UK, for example). Then, the whole “it is impossible to hire” nonsense has also been largely simplified with the “période d’essai” (the trial period), a several-month period at the beginning of a work contract where the employer and employee can terminate the contract at any given moment – which is a system used in other European countries as well. But things always get more complicated when we talk about firing French employees after the trial period, as letting French employees go usually requires a rather nice paycheck. In fact, numerous entrepreneurs actually get fired and start their companies using their severance payments. French firing practices may seem to many like the direct opposite of those in the US – which is why many US companies probably get scared away (but I digress).

Startup consolidation.

It’s been interesting to see what has felt like a massive wave of entrepreneurship in France over the last few years. Someone recently asked me how many startups there were in France and I can confidently say that I have certainly met over 1,000 in the last 2 years – probably more. But these are all teeny tiny startups of 1 or 2 people. So it’s definitely interesting to see these acquisitions and the possibility for more consolidation in the French startup scene.