“talk me through the acquihire process”
Summary of results
Would you like to talk about my process? I'm happy to share details.
All kinds of information is exchanged in an acquisition. The acquirer probably has an idea about how the company functions, which departments are key, which employees are key, and so on. They'll also have an idea about which employees or departments have been problems.
I am thinking of a specific example where my large company acquired a small startup. It had a sysadmin team of three people. This team had been identified as a point of conflict within the company - holding up projects and refusing to adopt automated process. It was already decided that the manager would be fired. My job was to determine the extent to which the employees were contributing to the dynamic, to determine whether they were open to change, and to assess their general competency. We needed to know how much of the existing team could be kept on to help.
I flew onsite for a few days. The story was that the acquiring company was gifting me to help their team, because they had been long complaining about needing headcount. I asked to be shown what people did day to day. I asked why it was done that way and I suggested new ways of doing it (how it would probably be done, post acquisition) and listened to their answers. I participated in their daily work routine.
As I recall we decided to keep all the employees. They had been marginalized by a bad manager and they ended up doing quite well helping out with the transition. The information I gathered helped structure the layout of the new team. Their old (fired) manager had not done a good job of assessing their skillsets or giving them latitude to move their platform forward.
Other times, I have identified people that needed to be let go. Sometimes it is clear that someone doesn't have the necessary skillset, isn't making meaningful contributions, or has some kind of personality conflict. I think we have all encountered someone like this in our careers at times.
The twitter process sounds chaotic and driven by a crazy timeline for sure. The scale is far larger. But, the steps they're taking to attempt to achieve this goal don't seem inherently wrong. Asking someone to bring a real sample of their work to discuss in an interview is a great tactic. If you asked me to design a process to hold these kinds of interviews at scale I might do the exact same thing.
It's definitely acqui-hire, too. That makes sense! Thanks for the perspective. I'm just wondering what arguments to bring to these types of conversations.
I went through an acqui-hire with the same structure - ironically, it was to be part of Ben's group at a different company.
In our case, they genuinely wanted the whole engineering team, so the interviews were pretty friendly, and our offers were fair. I'm not sure that was the case here, and I'm sure that came through in the tone of the conversation.
Really helpful to hear this from your perspective - thank you!
Couple of follow ups
1) What stage was your company at / how much had the startup raised when you got acquihired? Just curious about how this compares to where we are.
2) What was the interview process like? Any details would be helpful for me to get our team prepared
i wonder how this stuff is dealt with during hiring conversations like when you have a project already …. or how acquihires happen
Ask around some of your colleagues who joined as acquihires, especially the early ones.
wait for the acquisition to happen and then use the same methods you'd use to get an interview at any other company.
Having gone through an acquisition by a different company, I can say that this process almost exactly matches the process I went through. It was definitely a lot of work that ate up tons of time. It also wasn't something that could be discussed with most of the company, so now you add a few months of "acting funny" to the mix and it's a challenge and a half.
Acquisition does require a lot of manual work. There's a lot of back and forth, meeting and calls. Andrew Gazdecki, a founder of famous acquire.com thinks it's absolutely possible to automate and streamline these processes.
What do you think? If you were looking into selling your business, would you go to a broker or try to find a more straightforward approach?
it doesn’t depend on the size of the company, but the kind of acquisition and the terms of the acquisition
on acquihires you can have a full interview
I went on this meet and greet and it was more of a googlyness type thing just to check you have a pulse, others didn’t at all, all the team was hired, my only guess it could affected leveling and price
Oracle Acquisitions team would like to discuss a business transaction.
One version of that even got its own jargon: acquihire.
One incredible journey later and the product is already on the sunset.
Was an employee at six-person tech company that was acquihired. We went through a process with 7 companies (at least - founder tried to drum up interest with others), team interviewed with 4, we got 3 offers, and the founder chose the one that best fit the narrative. Answering from that perspective.
1) To maximize your chances, you need to speak with multiple companies and get multiple offers. Offers fall through so it's good to have backups and be able to tell potential acquirers that there is other real interest to up the urgency. If you haven't already told your team, you should tell them so they can prepare for interviewing with potential acquirers. If the majority of the team doesn't pass their interviews and/or is not a good fit for the company, they will pass. If a single person does not pass, they might decide to offer the whole team roles besides that person (happened to us).
2) Packages vary based on what you have to offer and how you can sell the team. In our case, investors got some shares in the acquirer (didn't match their ownership in the company, but at least they got something), there was a big PR campaign that saved face for the founder/investors/team, and the employees (including me) got solid base offers in addition to a small equity bump beyond our base grants.
3) From when I was told to when the deal was done, it took ~2-2.5 months. There was definitely some work the founder did prior to letting the team know, like gauging interest with founders/executives of the potential acquirers.
4) I wouldn't worry about this since you don't know what environment you are going into. In my case, it took a while for employees at the acquirer (~100 employees) to accept the the rest of the team and me, but ended up working out (we all stayed at least a year, most of us 2+ years).
Stop all work that isn't trying to sell the company and preparing for interviews. You may want to consider raising a bit more to bridge for another 3-4 months so you are covered if the acquisition process takes longer (e.g. during the summer key people might be out of office). This will also allow you to convince other potential acquirers that there is "synergy" to bringing your team and you in.
So is there a term like "acquihire" - except it means more like "we sold a stake in out company so we would get access to their legal department" instead of "we sold a stake in out company so we would get cushy jobs"?
Maybe acquihires
So, essentially, the mother of all acquihires?
Typical part of an acquisition process is a 'terms sheet' and usually terms sheets contain very explicit non-poaching clauses to stop the company that says they want to acquire doing an end run around the process by bulk hiring the people instead of acquiring the stock.
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Or, if it really was an acquihire, then you don't run around telling this to employees, not to scare them off .. (certaily this was a clause in the LOU/SPA)
an acquisition
> a bunch of people doing due diligence on an acquisition
Granted, it was nowhere near this scale, but I've gone through this process as the head of Engineering for the company being acquired. At that point, the business had already decided to acquire, so the process felt more about finding any red flags and/or identifying reasons to adjust the price.
For the process itself, the company looked at nearly everything over the course of a few months. Every detail of finances, sales, tech, operations, etc. was scrutinized, culminating with 16 hours (4 for business and 12 for tech/ops) over two days of standing in front of a room with 30 people.
Shortly after being acquired by IBM, I bumped into an acquaintance who'd been through the same process a few years previously. I asked, "What's it like?", he replied, "Acquirees never get a pay raise, but it's very easy to ensure your hourly rate goes up every year".
Most people I subsequently met were acquirees, and his observation seemed to apply almost universally.
Pretty cool that they shared the process. A couple things that seem interesting to me:
* Giving the acquirer the cap table early on seems to go against the advice I've seen.
* This is a ton of time investment for a company that has no idea if an offer will be forthcoming, or if it would be in a ballpark where a deal would happen?
The acquiree is supposed to go through 12 stages of diligence a code review, detailed financials, employee review, give out their roadmap, customers, vendors, cap table, source code, financial assets all before seeing any hint of what the offer will be or whether there will be one?
Is that right? Wouldn't getting an idea of whether you're in the same neighborhood be sensible before demanding so much?
Could you explain this a little more? I've worked in early stage startups for almost eight years and had 1 minor acquisition where I got barely anything. I'd love to look into this 'targeted approach' you mention.
First start with what you want, because there are multiple variables at play in an acquisition:
- Cash Comp - What you are actually paid every 2/4 weeks.
- Sign On Bonus / Retention Bonus - Paid lump sum (or over time) for joining the acquirer.
- Benefits - 401K / HSA / Health / Medical / Dental, individual or dependents.
- Equity - Assuming your equity will be bought out (cash) or rolled into new equity or both.
- Equity Vesting Schedule (AKA Golden Handcuffs) - On what terms does it vest? What are the strike prices for options?
- Non-Compete - May be part of the acquisition for a period of time.
- Termination - Golden parachute or termination without cause and you lose your equity?
Next, figure out what they can give you on each of these compensation areas.
This is the negotiation part.
- Maybe they are in a cash crunch and they can give you really generous stock grants?
- Maybe they are out of options in the pool and need to refresh it, so they'd rather give you cash.
Objective of negotiating is finding a solution that works for both parties. You will have a much better time if you focus on what works for them, and toy around with your preferences.
Every negotiation that starts with "Take them for all they are worth" sets the wrong tone.
Acquihire - you're not looking to buy the framework itself, you're looking to get the people who built it to work for you instead.
Not the OP. Though I have been part of a sale process as a founder (with a reasonably complex deal structure) and have had friends sell companies in the past and different friends who are in ongoing acquisitions. Let me see if I can provide some details without violating any NDAs!
To give a bit more color, the LOI usually is just the basic financial terms of the deal. It's an outline. But it usually *doesn't have space to cover many of the key details of what may make an acquisition "successful" for both parties.
KEY NOTE: NONE of the ideas below are from any one deal. Rather, it's an 'off the head' list of things I've seen matter across multiple deals.
1. Organizationally: Guidance on independence, integration(?), reporting structure?, approval structure, IT arrangements, WFH or vacation policies. Do you integrate with the buyers payroll and HR systems? Often these details matter intensely to your employees quality of life. I've seen these details go "good" or go "bad" with predictable outcomes. E.g. Try taking telling a team that's used to getting paid via Gusto that they're now going to be onboarded to a legacy ADP payroll system - it's unfun :)
2. Various financial Deal terms: Deal bonuses?. Pay changes?. Are you resetting vesting and or new equity? How might that work? Were you underpaying your team as a 'startup employees' - if so how does that change? Level matching? 401k matches - big companies are usually better here. Also, what about key employees/leaders you need to retain either to the deal close or +18 months?
Are they getting guaranteed severance for certain conditions? If so, what are those conditions? When deals get announced there can instantly be a lot of hurt/confused/angry people - so getting key ducks in a row before hand is essential. And trying to negotiate this after the fact will leave you constantly behind the "eight-ball" and with no leverage. Every deal I've seen has had some level of 'hurt feelings' by great people who felt valued and appreciated by the old org. now feel ignored and unimportant by the new org. The time to advocate for them is in this phase.
3. Team. Most members of the acquired team will leave within 2 years. I've heard figures by people who've done 100+ acquisitions that as high as 90% of employees will be gone. Obviously varies in every case. So how do you start planning for this natural turn over? How do you insure that the 'team' can stay strong even if the individuals change? Will the acquisition have the previous freedoms in hiring that allowed them to build a high velocity team in the first place?
There's a gazillion more things. In general, the more clarity that exists at the beginning, the better. And there's no way the LOI can contain (or should contain) even a fraction of that. But you certainly want it agreed to in writing.
Firebase (which I was part of). Dunno if you count it as an acquihire if the product survives but I am pretty sure we did what the big G hoped we would
Acquirire: a neologism which describes the process of acquiring a company primarily to recruit its employees, rather than to gain control of its products or services.
Have been acquired/acquihired a few times. Universal. Some holding company you've never heard of but probably have spent quality alone time on their primary website. Activision. General Electric. Accenture.
The distractedness of the executives is spot on. But it always seems to be in hindsight that we look back and go "huh, funny..." I am sure we could write an inference bot that monitors the calendars of people in the organization and estimates that an acquisition is imminent.
And the security/bug fixing. "Yeah, that bug has been there for three years, nobody has time to fix it." Well, all of a sudden, we are fixing it. And more besides. And the licensing of software and source code. Getting a full run down of every open source license, and I mean _every_ license, and then going back and checking them again. A sudden drive to document everything.
I've also seen the ugly side of acquisition too. An equity claw back that happened to me many years ago that I am still sore about. Sudden acceleration of equity grants and a "re-interpretation of what 'it' means" or extreme scrutiny of whether you actually qualify for the equity in your contract. I've seen a few good people suddenly not get anything because there was a missing signature on a document even though the person had been at the company three years.
Large amounts of acquisition money does strange things to people.
> it sounds more like attempted Acqui-hiring.
Except for the missing “acqui” bit, maybe?
Just so you're not surprised later - the acquihire-to-big-company stories I've heard all involved the team having to interview for the jobs via the standard process. So it's not so much a shortcut into a FAANG, necessarily. There's also a chance that while you'll make some money as an owner, they might not find a spot for you depending on how your own interview goes. Also wouldn't hold my breath for the team staying cohesive even if they all pass. Wishing you good luck, hope it ends up a positive experience!
Me. I am building and releasing in this space.
I have a tool that I "shipped" as demo-ward (loopalla.com) but pivoted to HiredUpon to focus higher in the funnel.
I want to rejigger the tech I built for Loopalla. I would love to do a customer discovery call with you if you would be willing. I am an ex-AMZN director. I have a AMZN style working backward FAQ doc ready to go to drive the call. I want to humanize hiring, ironically by using tech. :)
I was a lead at a startup that was acquired and the acquisition process would have probably sunk us if the acquisition had not gone through.
We were in the middle of raising our next round when the offer came through. The founders and the board decided to accept the offer but it was still contingent on due diligence. While going through the due diligence process all funding conversations had to stop. Luckily we were small so the due diligence process only took 2 months but we had to tighten our belts. If the acquisition had fallen through, we would’ve been in real trouble because we burned 2 months of cash and would have needed to line up funding quickly.
This first acquisition was done pretty quickly.
In fact, I probably looked at 2 dozen of businesses until this one stood out. the founder and I got along super well which made the acquisition process a breeze.
Start interviewing, for one. Not every acquisition ends with you still having a job, and not every acquisition ends with you wanting the job.
I lived through an acquisition in the teens that I feel was an illustrative story. An old financial services provider embarked on a massive, whole organization modernization effort. The new CEO went all in and actually made the necessary investment in staff and headcount, which was remarkable in itself.
A big part of the effort involved providing customers with big data solutions and all the implied benefits that would entail. They jumped aboard the hype train with gusto. Each quarter progress was reported and margins improved with a clear upward trend. From the trenches it was clear that even with the investment made, it was still not enough to reach any of the goals.
After a year of “modernization” the company was acquired, the buyer literally salivating over the coming profit margin increase and “synergies” in selling into related markets. After another year post acquisition it became clear that the benefits were simply out of reach, and the profits did not arrive. The acquiring company was left with the low margin business it had always been. Layoffs ensued as the buyer sought to salvage something from the transaction.
Turned out the entire modernization and big data effort had been an elaborate bait and switch committed by the board and CEO of the acquired company, masterfully executed.
I imagine the process is like any acquisition. From what I've seen so far, basic things people look for:
1. Business Registration (LLC, B corp, C corp, etc)
2. PnL for past 5 years
3. Tax statements
4. Banking statements
5. Inspect codebase, database, and cloud infra.
Also I'm surprised that you'd ask it here. Considering you're about to drop $250k, I imagine you'd hire a lawyer to look over everything.
Spookiest acqui-hire ever.
AMA Question - Does a process like this help you make better acquisitions, or is there still an art in picking the right startup at the right time for a business?
Were you not cynical afterwards that you’d just been brought in to make the acquisition look more attractive (perhaps by making the company seem more threatening to the acquirer by demonstrating ability to do rapid build)?
What does the acquiring company get out of this transaction though? What's the return on investment here if folks end up leaving or are completely checked out during their rest-n-vest? You can spend millions with a high end boutique consulting firm that will most likely be more accountable and productive than an acqui-hire.
A skilled acquirer would've interviewed engineering before moving forward, ostensibly on the grounds of "knowing what they're buying". They'd then know who to give bonuses and promotions to, vs those to kick out, from day one.
Having been through a few acquisitions, I have learned the truth of this. Eventually, I learned that if a company I work for announces they're being acquired, the best course of action for me is to start looking for other opportunities.
Even if I'm not laid off (which I haven't been yet in these situations), I'm effectively being hired by a new company that I haven't vetted. It's the perfect opportunity to reassess to determine if I fit into the new company and to scout around for something I may fit better in.
Been through an acquisition on the other end.
My main piece of advice is to talk to the employees of the larger company to suss out whether they like the company culture, whether you can or want to work with them and the processes your company will inherit. Treat it as an unofficial low-stress way of interviewing a company. :)
It's pretty much a given rule that the culture of the smaller company is subsumed into the large one - the only question is how fast it happens.
Assume any acquisition without public terms done over blog post is an acqui-hire. But given the market that's still an accomplishment!
Thanks for sharing this acquisition in such detail! How many potential targets did you evaluate to what degree before settling on Pixel? Trying to understand the total duration/effort from "I want to acquire something" to "acquisition completed".
This is my experience having been through 3 acquisitions.
In 1-2 years you go from:
- operating well, get bought
- throwing all the business infrastructure you've put in place that's deliberately different and better with what was before worse and slower
- then leaders get replaced or leave because we can't do anything anymore
- leaders start saying things like "we need to be more like a startup ", which would basically just hbe exactly what the company was pre- acquisition
Possible acqui-hire - perhaps it's not the product they're after...
Hey HN community,
A few weeks ago, I created Xplained, an AI-based answering engine that uses web data and LLM to provide responses (like perplexity). I am planning to sell my hobby project on Acquire.com and could use your advice.
What are your experiences with selling projects? How did you determine the valuation, pitch to buyers, and ensure a smooth sale process?
I'm looking for practical tips and insights to navigate this transition effectively.
Appreciate your guidance!
Onboarding is raw here. My advice for adoption:
1. Screenshots of product
2. Vidcast of set up experience
3. Vidcast of user experience to book a meeting on my meetsy
4. Demo instance (book a slot with Fakeman Bogus)
Hooking up Google Account without all this is not going to happen because I then have to go and de-authorize you after if I don't like it. At that point, I'm not going to do it.
> Make sure you’re convinced that they understand the level of investment needed from them post-acquisition.
It’s way more than this. The acquirer also has to share your vision, be willing to let you execute on it without interference, be willing to commit funding for sufficient time for it to grow legs, have deep enough pockets to sustain the investment, and be honest about all of the above. Quite often the acquirer is just as caught up in the heat of acquiring as the acquired is.
In my experience, if you are trying to execute on a vision, acquisitions are supremely dangerous.
To be fair, that was a classic acqui-hire.
Seems like an acqui-hire would be the way to save face after the face plant of all that time and money spent on a flop. But what are they offering to justify a $1B price tag?
Generally, you sit down to a meal or coffee with the executive in question; they answer your questions and try to convince you to join.
That conversation might span a few sit-downs or extend into e-mails.
If you eventually say “yes”, you’ll be funneled into the hiring pipeline midstream, skipping the entire front-end process.
It’s largely a formality — HR is told to hire you unless there’s a glaring red flag.
When I’ve been in that position, I wasn’t even asked for my resume until after we’d already negotiated my compensation, solely for inclusion in my HR file.
What’s your hiring process?