DoorDash just agreed to make the biggest acquisition in its history.
The company announced a deal to acquire Instacart for approximately $17 billion, valuing Instacart at $65 per share.
That’s roughly a 26% premium over Instacart’s October 22 closing stock price. At least 75% of the transaction is expected to be paid in cash, with up to 25% potentially paid using DoorDash stock.
At first glance, this looks like a simple delivery-company story.
DoorDash delivers restaurant food.
Instacart delivers groceries.
DoorDash buys Instacart.
Simple.
But that’s not the real business lesson.
DoorDash isn’t spending $17 billion simply to buy another delivery app.
It’s attempting to buy something much harder to create:
time, customers, relationships, technology, distribution and market position.
And that gives entrepreneurs a major lesson about how businesses really grow.
DoorDash Doesn’t Want to Be Just a Restaurant-Delivery Company
Most consumers still associate DoorDash with ordering dinner.
Pizza.
Wings.
Burgers.
Chinese food.
But DoorDash’s ambitions have become much larger.
The company increasingly wants to become a platform consumers use whenever they need something from a local business delivered to their home.
That could mean:
Groceries.
Pharmacy products.
Convenience-store purchases.
Retail products.
Alcohol.
Restaurant meals.
Household supplies.
That’s a significantly larger market than restaurant delivery alone.
Acquiring Instacart would dramatically strengthen DoorDash’s position in grocery delivery, where Instacart has spent years building relationships with retailers and customers.
Reuters described the acquisition as DoorDash’s largest ever and a major attempt to expand beyond restaurant delivery while competing more aggressively with companies such as Amazon and Walmart.
That’s where this deal becomes interesting.
Sometimes Buying Growth Is Faster Than Building It
Entrepreneurs are constantly told:
Build your business.
Build your website.
Build your customer base.
Build your technology.
Build your brand.
And building from scratch can absolutely create wealth.
But there’s another path.
Acquire what somebody else already built.
Think about what it would require for DoorDash to independently recreate everything Instacart already possesses.
DoorDash would need to develop grocery relationships.
Recruit retailers.
Acquire customers.
Develop grocery-specific technology.
Build shopper infrastructure.
Develop advertising capabilities.
Learn consumer grocery-shopping behavior.
Compete for years while doing it.
Or DoorDash can potentially buy the company that already spent more than a decade developing those capabilities.
That is one reason acquisitions happen.
Businesses don’t only buy revenue.
Sometimes they buy time.
And time can be one of the most expensive resources in business.
Instacart Wasn’t Exactly Struggling
Another reason this deal matters is that Instacart wasn’t simply a failing company searching for someone to rescue it.
Instacart reported that its third-quarter gross transaction value increased 15% year over year, while total revenue increased 17%.
The company generated $147 million in GAAP net income during the quarter, while adjusted EBITDA rose 23% year over year to $342 million.
DoorDash is therefore attempting to purchase a company that already has:
Customers.
Revenue.
Technology.
Retail relationships.
Brand recognition.
Data.
Infrastructure.
Profitability.
That’s very different from acquiring an idea.
It’s buying an operating asset.
Relationships Have Financial Value
This is something entrepreneurs often underestimate.
We think of assets as things we can physically touch.
Buildings.
Equipment.
Vehicles.
Inventory.
But some of the most valuable assets in a company don’t appear that way.
Customer relationships have value.
Vendor relationships have value.
Distribution has value.
Brand recognition has value.
Data has value.
An existing audience has value.
Imagine trying to build relationships with hundreds of grocery retailers from scratch.
That requires years of meetings, contracts, integration work and trust.
Instacart already has those relationships.
DoorDash is potentially acquiring access to them.
That is part of what makes a company valuable.
DoorDash Is Really Competing for the Customer Relationship
This acquisition isn’t simply DoorDash versus Instacart.
The competitive landscape is much larger.
Amazon already has groceries, retail, Prime membership and an enormous logistics network.
Walmart has thousands of physical stores, groceries, delivery infrastructure and Walmart+.
Uber has restaurant delivery and is also expanding into grocery and retail delivery.
Everybody wants the same thing:
the customer relationship.
Because once consumers regularly use your platform, you can potentially sell them more.
Maybe you initially open DoorDash because you want dinner.
Later you use it for groceries.
Then convenience items.
Then pharmacy products.
Then retail.
The more transactions a customer performs inside one ecosystem, the more valuable that relationship can become.
That’s why large technology companies constantly attempt to expand what customers can do within their platforms.
The customer isn’t only buying a product.
The company is trying to become part of the customer’s routine.
Why Pay a 26% Premium?
DoorDash’s offer values Instacart at $65 per share, roughly 26% above the stock’s October 22 closing price.
Why would DoorDash willingly pay more than the stock market had recently valued Instacart?
Because shareholders need an incentive to sell.
Imagine owning something worth $100 today.
Someone approaches you and says:
“I’ll give you $100 for it.”
Why would you necessarily agree?
You could simply keep your asset.
But if somebody offers $126?
Now there’s an incentive.
Acquisition premiums compensate shareholders for giving up future ownership.
DoorDash is betting that the long-term value it can create by combining the businesses could justify paying that premium today.
Whether that bet succeeds remains to be seen.
How Do You Pay for a $17 Billion Company?
Here’s another important business lesson.
DoorDash isn’t simply opening its checking account and writing a $17 billion check.
The transaction is structured using a combination of financing sources.
At least 75% of the consideration is expected to be cash, while up to 25% can be DoorDash stock.
DoorDash says it expects to fund the cash portion using existing cash plus debt financing.
This is how large companies frequently approach major acquisitions.
They might use:
Cash.
Debt.
Stock.
Or some combination of all three.
That is financial leverage at an enormous scale.
Instead of asking:
“Do we have $17 billion sitting around?”
Management asks:
“How can we structure this transaction in a way that gives us control of an asset we believe will create greater value in the future?”
That is a fundamentally different way of thinking about money.
Bigger Doesn’t Automatically Mean Better
Of course, a $17 billion deal isn’t automatically a great decision.
Major acquisitions fail all the time.
DoorDash still faces significant risks.
The businesses must eventually integrate.
Management has to determine how the platforms work together.
Customers have to continue using them.
Retailers need to remain satisfied.
Debt has to be managed.
Competitors will respond.
And regulators still need to approve the transaction.
Reuters reports that the deal could face substantial antitrust scrutiny because DoorDash and Instacart both operate in grocery delivery. Regulators may examine questions involving competition, fees, consumer pricing and how the combined company might use customer data.
That’s one reason the expected closing date is so far away.
DoorDash and Instacart currently expect the transaction to close toward the end of 2027 or during the first half of 2028, assuming
Want to Learn How to Buy a Business Instead of Starting One?
DoorDash is attempting this strategy at the $17 billion level, but acquisition entrepreneurship isn’t limited to billion-dollar corporations.
Small businesses, websites, service companies and existing cash-flowing operations are bought and sold every day.
If the idea of buying an existing business instead of starting from zero interests you, here are two resources worth adding to your reading list:
📚 Buy Then Build by Walker Deibel
This is one of the best places to start if you’re new to acquisition entrepreneurship. It explains how entrepreneurs can search for, evaluate, acquire and grow existing businesses rather than taking the traditional startup route.
👉 Check the current price of Buy Then Build on Amazon (paid link)
📚 HBR Guide to Buying a Small Business
For readers who want to dig deeper into the actual acquisition process, this Harvard Business Review guide covers finding potential businesses, evaluating opportunities, raising acquisition capital, negotiating with sellers and avoiding common deal mistakes.
👉 Check the current price of HBR Guide to Buying a Small Business on Amazon (paid link)
💰 Need Capital for Your Business?
Buying or growing a business usually creates another question:
How are you going to finance it?
If you’re looking for business-funding options, you can explore available funding resources through Wealthbuilderz.
👉 CLICK HERE TO EXPLORE BUSINESS FUNDING
Always evaluate the cost, terms and risks of financing before borrowing money.
Affiliate Disclosure: Some links on this page are affiliate links. Wealthbuilderz may earn a commission if you make a qualifying purchase or complete an eligible transaction through one of these links, at no additional cost to you.
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