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Acquihires: What You Need to Know

True North Mergers & Acquisitions

June 30, 2023

Whether you're a well-established organization or a fledgling startup, you’re probably seeking top-tier talent. The reasons for this go beyond simply having a skilled workforce. You understand that talented individuals can drive strategic advancements within your organization, ultimately making it more attractive when the time comes for a sale, acquisition, or, in this case, getting acquihired.

But we’re getting ahead of ourselves. First, what is acquihire? And, more specifically, how do you get your organization “acquihired?”

What is Acquihire?

Acquihire is short for “acquisition hire,” a strategy where a company is acquired primarily to acquire its talented workforce—not the company’s products or services.

Why Do Acquihires Happen?

Generally, acquihires occur when a larger company sees value in a small company’s talent pool and believes that integrating these skilled people into their own organization will bring them strategic advances.

The larger company's goal is to tap that team's expertise and use it to boost innovation and accelerate growth. Unlike traditional acquisitions, acquihires prioritize “human capital” over intellectual property, customer bases, market share, or products.

How Much Do Acquihires Cost?

That depends. The cost of acquihires can vary significantly depending on the size of the company being acquired, the number and expertise of the employees involved, the industry, and market conditions.

With that said, acquihires usually cost less than traditional acquisitions. Why? Because the organization's primary value lies in the talent rather than the company's physical (or intellectual) assets.

What’s the Best Way to Get Acquihired?

While there’s no guaranteed formula to getting acquihired, you can increase the odds by:

1. Building a strong team: Develop a strong brand that effectively communicates your company's values, culture, and unique opportunities. Ensure that your brand messaging resonates with your target audience and showcases why talented individuals should choose to work for your organization.

Also, consider offering attractive benefits that go beyond monetary rewards. This could include flexible work schedules, remote work options, comprehensive healthcare plans, retirement savings plans, and professional development and growth opportunities.

2. Differentiating yourself in the market: Yes, acquihires generally happen because companies are interested in your team, not your product or service. However, your ability to distinguish your organization from your competitors can significantly enhance your appeal.

3. Establish a solid track record: Can you prove your organization’s viability and growth potential? Do you have metrics, market share, and industry recognition to demonstrate your success?

4. Identify potential candidates for acquihiring: Make a list of large companies in your industry that offer similar products or services. Narrow the list to those companies that have publicly shown interest in your specific focus area.

Once you have identified potential targets, create a compelling pitch deck to showcase your company's value. Reach out to these companies to gauge their interest and request a meeting to discuss further. During the meeting, present your pitch and highlight the benefits of a potential collaboration or acquisition.

Access Our Experience to Achieve Your Goals

Whether you’re looking to set long-term goals, scale your business, build an exit strategy, acquire, or be acquihired, our experienced business advisors can help. With decades of experience and a track record of successful mergers, acquisitions, and growth, we have the expertise to ensure the long-term success of your business. Contact us today!

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