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.

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.

wait for the acquisition to happen and then use the same methods you'd use to get an interview at any other company.

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.

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.

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.

Try to get some help from your investors on the acquihire, if you have professional investors.

Btw 1.5 months likely not enough time to close a deal, need to be pulling alarm levers now.

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?

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

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

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"?

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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.

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

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. :)

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.

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.

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.

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)?

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.

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".

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.

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?

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

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.

One of them acquihires deno for 100M!

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.

I used https://acquire.com/ in this case. I looked at maybe 80 companies just from the surface. Then inquired about 15-20 of them for more details. After about a week of thinking, zeplo wouldn’t leave my mind. There was one other close contender but zeplo was more present in my mind and had better metrics.

From there it was letter of intent, due diligence, asset agreement, escrow, and asset transfer. Hopefully this helps.

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.

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

My firm doesn't acquire the companies themselves, we work with companies (like Gitlab) or private equity firms who acquire businesses to help them understand the technology. So our clients pick the startup and they usually have a thesis for acquisition. During diligence it's their opportunity to confirm or deny that thesis, and as an objective, third party set of expert eyes we can help them do that.

I've been part of the team that sets up this process at a few SaaS's, and I've done SaaS procurement for a while, so I clicked that button often (if I didn't know anyone at the company).

1. It gets added to a list of marketing website leads, which is owned by SDRs/BDRs who are there to filter and qualify leads. These are usually early-career people, with a base salary + quota for qualifying leads. The website is many times their least preferred channel of leads due to the quality, but they can't ignore it because sometimes good customers do come through there.

2. The SDR will either work over email or on a call; their goal is to identify if you're a real potential customer (vs shopping for prices, vs confused about what we sell), write up notes, and identify which customer segment you belong to (geography + business type + business size).

3. You will then speak to a salesperson (with varying titles "Account Executive", "Sales Director", "Regional VP of Enterprise Sales", or whatever inflated title makes sense for that sales organization). Their goal is to confirm they're speaking to the right person in your organization (or wasting their time), if your use case is meaningful enough for the "enterprise plan" (they can't sign too small deals), what your budget is, what your usage will be like, etc.

4. Pricing could be made up by guessing your price point, but it's rare. It is difficult to consistently make up pricing that works over time and doesn't have many lowball deals that harm the company's revenue long-term, and salespeople often don't understand the technical details well enough to make things up that make sense. Usually, there will be a pricing framework and an internal calculator (very often, a spreadsheet with formulae and VLOOKUPs) that will give them a range. They can then choose what number within that range to offer, based on who they think you are and how far off they are from their quarterly quota.

5. They can then negotiate the number, or the included features, or the payment terms (upfront payment, multi-year contract, exit clauses, etc.) which can be translated into discounts if they're favorable to the seller.

Can elaborate on why they might do this versus your approach?

Also, what does it take to become a company that can acquire esims?

I was looking to go big because I anticipate that I will not be able to do it part time. I am looking for a full time opportunity so that I can leave my job and focus on it, while drawing some income to pay bills.

Is there any info you can share on your acquisition process? Was there any steps that reassured you wouldn't be left with an empty account and no business operation to take over?

I was in a similar position to you a couple of weeks ago - switched job after the better part of a decade. The main things I've found that have built trust are:

1. hanging out casually with teammates in the office

2. taking notes and/or screenshots in every conversation and then reviewing them to stay on top of everything

From the other side, I've onboarded a lot of engineers in the past and the best ones have been "yes, and?" people. So you'd explain a process to them, they'd say yes and try to figure out what comes next. e.g. if someone explains that changes are released via a pipeline, the best on-boarders I've seen would say "yes, and what stages are in the pipeline and how do they progress?". Where possible I'd recommend the pro-active questioning approach.

I was an early employee at Algolia [YC W14] and had the chance to witness the hyper growth trajectory from $3m to >$60m ARR.

There is one sales methodology that really impacted our sales execution and helped us win more deals.

I thought it could be interesting to share it. I really recommend to use it if:

your ACV is >$10k

your sales cycle is >1mo (i.e. mostly sales led vs 100% self serve PLG).

At Palette we built our own tool to implement this methodology seamlessly, but recently decided to carve it out for other teams to use it.

It’s called TallyPulse.com

"Write an acquisition blog post that makes it look like we admire the company that bought us, and we're not in it for the money and that it was a hard choice."

Having been on the acquiring side of a few of these, I've seen where the company being bought didn't really understand why they were being bought. It can be hard to to internalize why you're being bought as being bought is a sign of success. Some of the acquisitions I saw we were buying something very specific yet the company had a lot more. People get excited about their future roadmaps when they're often being bought for what they have, it can be hard to turn that off.

And lets not get started on the 1-2 year slowdown that an acquisition can put into a team.

Hello guys. @omosayansii here. Currently Building @acquisitionsHQ

How it works and what it solves

There's pain, struggle when it comes to exiting a startup or a product as a Founder. This can be due to:

New Product Ideas Validation

Inability to Market & Scale the Startup

Burn Out from Micro Managing Multi StartUps

Exit completely to focus on other side projects, Fulltime gigs etc

Most of the time this leaves you in a dilemma, not knowing what to do with the startup you have already built and validated. Exiting and acquisition process can be tedious due to premium requirements & numerous rejections based on mostly Revenue Metrics from the "existing giant platforms"

The startup is market fit, but on the other hand you have less motivation to keep scaling it. Don't abandon that Tool , leaving it as a Dead Project.

Instead jump on to startupsacquisitions.com/submission submit & list. Find your next buyer.

You don't need $10K MRR to exit. Just an MVP and you are good to go.

Not really. The founders got acquihired. Basically a face saving operation. The company and product did not go with them so it was just a fancy hiring process.