Acquihire

An acquisition made mainly to hire the team, where the product is usually shut down.

Example

A buyer paying enough to cover investors' money and offering the engineers jobs.

Important

Often a soft landing rather than a win. Founders may receive retention packages while investors get little — which can create real tension.

Related terms

  • M&A (Mergers & Acquisitions) — One company buying or combining with another.
  • Liquidation preference — The right of preferred shareholders to get their money back first when the company is sold, before common shareholders get anything.
  • LOI (Letter of Intent) — A mostly non-binding document setting out the proposed terms of an acquisition before full diligence.

Lessons that explain it

  • Why companies acquire startups — Advanced. Understanding the buyer's motive tells you what your company is worth to them, and to whom. (12 min)

All 176 terms in the Founder glossary