What happens in an Acquihire?

An acqui-hire basically is a fancy way to say your company is being bought predominantly for the fabulous team you’ve assembled and not for the product/service you were (trying) to bring to market. This can be tidier than a wind-down process for a failing company, but often signals a distressed sale.

How do you price an Acquihire?

When it comes to pricing, buyers frequently express the price on a “per head” basis, and the rate can be a few hundred thousand or two million dollars per head. There are no set rules for an acqui-hire, which are often a combination of stocks or assets.

What is the difference between acquire and Acquihire?

Acquihire is basically done when the acquirer values the team and their talent, skills more than the company and the business that they have helped build. An acquisition, on the other hand, is when the acquirer values both the business and the team associated with it.

Is being acquired a good thing?

If you’re an employer, an acquisition is a good thing. This means that your business gained so much revenue and popularity that another larger company sees its potential and purchases it. If you’re an employee, you may have a different mindset about acquisitions.

What is a typical deal structure of an Acquihire?

The deal is typically structured as an asset purchase (as opposed to a stock purchase or merger) — though the acquirer often does not actually want the startup’s IP and/or other assets. Accordingly, the deal may be a mere fiction designed to get funds into the startup to be distributed to its investors.

Do Acquihires work?

An acqui-hire doesn’t guarantee employment for the workers at the startup. An acqui-hire can reinvigorate a company and increase its earning potential. That’s particularly true since most acqui-hires aren’t expensive purchases for large businesses.

What might be some disadvantages of Acqui hiring?

For the business performing the acqui-hire, the biggest disadvantage is risk. Their hire assumes that the workers will come to the new company. Unless the employees are under contract, that’s not something anyone can guarantee.

What is a SPAC stock?

Special Purpose Acquisition Companies or SPACs are non-operating publicly-listed companies whose purpose is to identify and purchase a private company, allowing the acquisition target to have publicly listed stock. SPACs are also known as blank check companies.

What is an acqui-hire and how does it work?

What is an Acqui-hire? An acqui-hire basically is a fancy way to say your company is being bought predominantly for the fabulous team you’ve assembled and not for the product/service you were (trying) to bring to market. This can be tidier than a wind-down process for a failing company, but often signals a distressed sale.

What are the disadvantages of an acquihire?

Prospects of a setback: An acquihire does not ensure that everybody will be hired. Some people might not do well in their interviews. When a sufficient number of new hires fail the interview, the company’s purchase becomes obsolete. It is less valuable without the whole team.

Who are the best acquihires?

Best acquihires are people and teams, who are passionate about their goal and are convinced that being part of a bigger team with more exposure and influence would help them reaching it. Those people have started their companies and have successfully grown them up to certain level.

Why are there so many Acqui-hires in the tech industry?

The number of people qualified to work in the industry is small. Companies with lots of cash flow try to lure top talent. When they can’t do that, the acqui-hire is a great strategy. The key is the current imbalance between supply and demand. Anyone who can write an app is capable of becoming rich and successful.