M&A (Mergers & Acquisitions)

One company buying or combining with another.

Example

A larger platform acquiring your company for its product and team.

Important

Most startup exits are modest acquisitions, not IPOs. Buyers usually acquire for a specific reason — technology, team, customers or removing a competitor.

Related terms

  • Acquihire — An acquisition made mainly to hire the team, where the product is usually shut down.
  • LOI (Letter of Intent) — A mostly non-binding document setting out the proposed terms of an acquisition before full diligence.
  • Due diligence — The investigation a serious investor or acquirer runs before completing a deal — financial, legal, technical, commercial.
  • Investment bank — A firm that advises on and executes large financial transactions — mergers, acquisitions, IPOs and large debt or equity raises.

Lessons that explain it

  • What investment banks actually do — Advanced, and mostly not relevant to you yet. What they are, and the one situation where a first-time founder might meet one. (10 min)
  • Why companies acquire startups — Advanced. Understanding the buyer's motive tells you what your company is worth to them, and to whom. (12 min)
  • How an acquisition actually runs — Approach, LOI, diligence, negotiation, close. The exclusivity clause is where founders lose their leverage. (12 min)

All 176 terms in the Founder glossary