“talk me through the acquihire process”
Summary of results
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.
Acquihire's are very common. You can negotiate who is coming with you (or force getting the entire team and not just the A players), agreed to pay raises during the transfer, stock or other important roles, etc. Less unsettling for the employees too, having to go through the interview pipeline like a walk-in would.
Sometimes its the entire goal. Leave a company to fill a need it can't solve itself with the plan to get bought back in later.
Times have changed tho so who knows.
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.
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.
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 wonder how this stuff is dealt with during hiring conversations like when you have a project already …. or how acquihires happen
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.
wait for the acquisition to happen and then use the same methods you'd use to get an interview at any other company.
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.
That’s precisely how acquisitions at my current and past company worked. Everyone signs NDAs, there’s a fee paid by the purchaser for the time should they decline the deal, and the audit commences.
I’ve been asked to do the evaluation a few times and it’s pretty straightforward. Even if you think the code is of poor quality, it may still make sense to complete the purchase because of the business case.
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"?
So, essentially, the mother of all acquihires?
MicroAcquire's startup resources help you navigate the complex process of buying or selling a startup.
Ready to meet potential buyers?
List your startup and get it in front of over 100,000 potential buyers. Selling your startup is a long,
frustrating experience, full of stops and starts, hard-nosed negotiation, and emotional flare-ups.
It’s like going on a string of bad dates to find the right match. Investment banks are expensive, due
diligence takes months, and even if you do everything right, your startup might still not get acquired.
Our mission is to bring the startup acquisition market together, with trust, transparency, and ease of use.
an acquisition
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?
Sure I can clear it up.
What happens is once they are into a potential deal, they go into exclusivity with the buyer, and we get brought in for a wack of interviews and going through their docs. Part of that period includes NDAs all around, and the agreement that they give us access to whatever we need (with sometimes some back and forth over IP). So could they lie? Technically yes, but as we ask to see things to demonstrate that what they said is true, and it would break the contract they've signed with the potential acquirer, that would be extremely risky. I have heard of cases where people did, it was discovered after the deal, and it retroactively cost the seller a giant chunk of cash (at risk of even more giant law suit). We typically have two days of interviews with them and we specifically talk about tech debt.
Our job is to ask the right questions and ask to see the right things to get the goods. We get to look at code, Jira, roadmap docs, internal dev docs, test runner reports, monitoring and load testing dashboards, and so on. For example, if someone said something vague about responsivness, we'll look into it, ask to see the actual load metrics, ask how they test it and profile, and so on.
I got into because I had been the CTO of a startup that went through an acquisition, knew someone in the field, didn't mind the variable workload of being a consultant, and have the (unusual) skill set: technical chops, leadership experience, interviewing and presenting skills, project management, and the ability to write high quality reports. Having now been in the position of hiring for this role, I can say that finding real devs who have all those traits is not easy!
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.
Can you be more specific? Do you mean like doing a DD on the product and sales strategy of the company that is being acquired?
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?
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.
Start interviewing, for one. Not every acquisition ends with you still having a job, and not every acquisition ends with you wanting the job.
Our experience was quite different in terms of how it progressed (we were acquired by a public company). I remember after meeting with the Chairman/CEO they more or less went straight into heavy due-diligence; Deloitte audited our financials (I believe this was paid for by the acquiring company). The process in our case was much quicker than six months to get to the definitive agreement - only a few months. It was tremendously stressful, however I recall that day of initialing what seemed like hundreds of pages of agreement for the sale - such relief.
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?
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.
Assume any acquisition without public terms done over blog post is an acqui-hire. But given the market that's still an accomplishment!
A lot of these look like cases of sales of smaller startups (which is fine). The process he describes is almost identical with Enterprise sales, down to the role of the “coach” in the customer’s (acquirer’s) company.
Which makes sense, but framing it that way from the start will make it easier to navigate.
Possible acqui-hire - perhaps it's not the product they're after...
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.
If you're getting acquired pay attention to whether the buyer needs your product, or your vision. That'll tell you how quickly your pre-aquisition culture will be stamped out.
Our onboarding currently includes a quick demo to ensure users get the most value out of the tool and understand its capabilities in detail.
Having said that we have a role play which you can try. In roleplay, you talk with our AI and then we evaluate your performance.
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?
You do realize acquisitions occur?
If you own equity hopefully they'd have told you about the acquisition beforehand as a shareholder! But that said it's not unusual to have to do paperwork, for example you can have "offer of first refusal" on the sale of shares which gives you the right to buy the shares being offered for sale, over the person making the current offer, so companies will get people to sign a contract waiving that right as part of the sale process. Sometimes you'll be transferring shares from the old company to shares in the acquiring company and so on. Those latter things you should run past a lawyer anyway!
I went through some of what you’re writing about: start-up, acquisition, handcuffs, sabbatical-mode, and now newco.
Feel free to email me, happy to chat it through.
The attention grabbing and objection handling pieces are discussed in Never Split the Difference, amongst other ways to negotiate a deal. Basically ask lots of what/how questions until the other party negotiates themselves to your position.
The rest of the script is just qualification questions, which you can find written about everywhere if you look up BANT (Budget, Authority, Need, Timeline) and MEDDPICC (Metrics, Economic buyer, Decision criteria, Decision process, Paper process, Identify pain, Champion, and Competition).
I wish I had a good book recommendation for qualifying, but it’s the easier part of the sales process: you’re just asking questions and listening, setting yourself up for the next stage. Once you know whether the prospect has a problem you can solve, then you launch into the real sale, generally a presentation or demo tailored to the prospect’s problems and goals.
YC posted a pretty good, compact video on enterprise SaaS sales recently, which explains the typical sales lifecycle at a high level and contains further resources: https://youtu.be/0fKYVl12VTA
A small tip: your hiring process feels quite heavyweight for a new company
> Our Typical Process
Initial call
Call with the Deta CEO
Trial project & skills deep dive
De-brief & references
Offer
Try to reduce the stages, especially the Trial Project part
One of them acquihires deno for 100M!
Hey, congrats on the growth guys! Drop me an email, happy to share some advice around this. I've run small acquisitions for companies and have some specific ideas that can help you guys (ofcourse, its all free advice).
The best case scenario is where you have inbound offers.
But typically all these ideas will revolve around a couple of things:
- Figuring out the right mix of companies of companies that will value this
- Figuring out the right people to connect with (it's not always corp-dev) and tactical advice around how to reach them
- Other creative stuff (like using influencers to your advantage)
rishabhkaul at gmail dot com I am based in London, so similar timezone to you.
What terms would you have offered, including any seller financing, required lock-in or employment from Michael, etc? What would you have done with the product after acquisition?
Can you share some insight into the hiring process?
30 mins chat with a recruiter who'll try to suss out whether they can afford you, make sure you're actually interested, and check you've got the right to work in the country.
1 hour hiring manager interview the first person who actually understands those acronyms on your CV
1.5 hour technical/coding interview, to check you know how to program
1 hour behavioural interview to check if you've ever gotten into a fistfight about database schema design
1 hour chat with your boss's boss's boss, who feels he ought to have a conversation with someone before approving a six-figure paycheck.
This lengthy and bureaucratic process is vital to ensuring prospective hires have the patience needed to get through all the other lengthy and bureaucratic processes their job will entail.
we need to have better diagnostics here
- what is your candidate acquisition strategy?
- what is your assessment strategy?
- what are the conversion ratio's in the assessment stages?
- what do the candidates themselves say if / when they say no?
I don't mean my comment as admonishment, so if you can reply with above, I will try to help
Founder here of a company that attempted to do an acquihire Hail Mary.
Going to be frank with you. 1.5 months is not enough time. Go through the motions and meet with FAANG, but for all intents and purposes it is too late. There’s very little incentive for BigCo to buy a dead company.
Tell the team now, pay out their salaries for next 1.5 months but have them focus full time on getting new jobs. That’s the best you can do for them.
First you got to get through the HR process.
Now when I interview you, I’m not going to ask you to reverse a btree on the whiteboard. I’m going to ask you questions to see if you can “handle ambiguity” and work at the scope I need you to work at.
I’ve spent the last decade mostly as one of the early technical hires for a major new initiative and then leading cloud consulting projects (3.5 years at Amazon and now at a third party company both full time). I need to know I can throw a vague set of business requirements at you and you can take the ball and run with it.
I actually did a thumbs down to a very smart guy who had been laid off from the AWS EC2 service team because when I asked him behavioral questions, I didn’t get a sense that he could handle the type of green field initiatives I was going to throw at him.
Like everyone says, it varies greatly. The change can be fast, or it can be slow. The acquisition could be a nightmare or it could be intentionally thoughtful. It’s important to figure these things out before agreeing to be acquired.
Having done compartmentalized (I wasn't on the team acquiring) technical due diligence two times, my job had nothing to do with if the acquisition was a good idea or not. My job was to vet if they had what they were saying they had or if it was all smoke and mirrors. As others have said, the decision was already made to buy them, I was just vetting that we were buying what we thought we were buying. I also would look for the smouldering tech debt and cost out moving to our tech platforms (AWS). And I'd answer risk but not IP questions for the acquiring manager.
The only way I'd tank a deal was by identifying that it was in fact smoke and mirrors.
Has the Acquirer made known their intentions?
From your leadership teams POV does this look like a good strategic match?
There are numerous scenarios—
The Acquirer might want just the IP, or Client Relationships, often they will want to retain key staff.
Good food for thought on Surviving M&A > https://hbr.org/2017/03/surviving-ma