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by Foti Panagiotakopoulos Founder at GrowthMentor

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Despite the name sounding like a bottled water brand, the term acqui-hiring refers to a business practice that can be a powerful source of growth for the companies that use it.

Here, we’ll be explaining what acqui-hiring is, how it works, and some of the pros and cons for businesses that choose to go this route.

What Does Acqui-Hiring Mean?

Acqui-hiring (a portmanteau of “acquire” and “hiring”) is when a company acquires another company primarily for the talent and expertise of its employees, rather than for its products or services.

In other words, it’s a talent grab!

There are tons of examples of acqui-hiring that we could talk about here, but we’re going to keep things brief and stick to a single one.

In 2012, Facebook was dominating the social media landscape, and Google wanted to compete. The problem was that Google didn’t have the expertise or infrastructure needed to build a social media platform without an extensive (and costly) recruitment process.

To avoid this, Google decided to acqui-hire a mobile and web app development company called Milk for an amount ranging between $15 and $30 million. Google kept the entire team intact and set the to work developing Google+. The end result was mixed, but the thought process was clear!

What Are the Benefits of Acqui-Hiring?

If this is your first time hearing about acqui-hiring, it might seem like a pretty strange concept. After all, why would a company go through all the trouble (and expense) of acquiring another company just to hire its employees?

There are a few reasons:

1. To get access to a larger pool of talented workers.

This is especially useful for companies that are looking to enter a new market or expand their operations into a new area. By acqui-hiring a company that already has employees with the relevant skills and experience, they can hit the ground running and avoid the time and expense of recruiting and training new employees from scratch.

2. To quickly build up a team of experienced workers.

This is especially helpful for startups that are looking to scale up their operations quickly. Rather than going through the lengthy and expensive process of hiring and training individual employees, they can simply acquire an existing company that already has a team of experienced workers in place.

3. To avoid the costs associated with recruiting and training new employees.

Hiring and training new employees can be a time-consuming and expensive process. By acqui-hiring an existing company, businesses can avoid these costs and get a team of ready-to-go employees instead.

4. To acquire new technologies or expertise.

In some cases, businesses may acqui-hire a company primarily for its technologies or expertise, rather than for its employees. This can be a quick and effective way to gain access to new technologies or expertise without having to develop them from scratch.

How Does the Acqui-Hiring Process Work?

There are a few different ways that acqui-hiring can work, but the most common is for a larger company to acquire a smaller company that has the talent and expertise they’re looking for.

The larger company will typically offer to purchase the smaller company for a lump sum of cash, which the smaller company’s shareholders can then use to buy up the larger company’s stock.

Once the deal is complete, the smaller company will be dissolved and its employees will be absorbed into the larger company.

Should You Agree To Be Acqui-Hired?

If you’ve received an acqui-hiring offer as an employee, here are a few things to consider:

Pros of Being Acqui-Hired

  • You’ll receive a lump sum of cash. This can be a great way to immediately increase your earnings and grow your wealth.
  • You’ll have the opportunity to join a larger, more established company. You can advance your career and gain new skills and experience.
  • You’ll have the opportunity to work with new technologies or expertise. If you’re looking to learn new things and stay up-to-date with the latest advances in your field, this can be a great opportunity.

Cons of Being Acqui-Hired

  • You may not have much say in the matter. Once the deal is done, you’ll be expected to join the larger company and may not have much choice in the matter.
  • You may not be able to take your current job with you. In some cases, the acqui-hiring deal may involve dissolving your current company and starting fresh with the new company. This means you may have to start at a lower level within the new company, even if you have more experience than some of the other employees.
  • You may not be able to take your current team with you. This can be an issue when you’ve formed strong bonds with your old colleagues and will eventually need to form new relationships with new ones.

Only you can decide whether or not an acqui-hiring offer is right for you. Weigh the pros and cons carefully to make sure you’re making the best decision for your career.

Want to Learn More? 

If you are interested in learning more about how acqui-hiring works, or if you’re looking for a mentor as you think about next steps, GrowthMentor is here to help!

We have a community of entrepreneurs and professionals who are happy to chat, share advice, and help you grow. Get started today!

Suggested mentors to help you make sense of Acqui-Hiring

Vidya Dinamani

CPO @ | Product Coach @ ProductRebels | Partner at Ad Astra Ventures

I’ve coached product teams all over the world, from startup to Fortune50. I have had executive roles leading product, customer experience and design in leading companies such as Intuit. I love helping founders and product leaders rapidly getting to product-market fit.

Miguel Trujillo

Fundraising + Sales & Business Development Mentor

Hi, my name is Miguel. I am a mentor from Madrid, Spain. I can help you to raise venture capital (10+ yrs of experience) and in business development strategy (sales above all).

Rob te Braake

Founder - Insight Matters

Serial entrepreneur – combining love and experience in Finance, Accounting, Strategy and Coaching.

Ari Bencuya

Entrepreneur and Start-up Mentor

Hi everyone! I’m a serial entrepreneur and start-up founder. I’ve started multiple companies and have had the fortune to sell a few. I’ve also been on the other side of the table as a partner at an incubator/accelerator. I’ve love talking about start-ups and solving problems. Let’s talk!

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