Acquihire
Why it matters
For a founder, an acquihire marks the likely ceiling when a company is stalling. The price tracks what the team would cost to recruit, not a multiple of revenue, so investors often recover only part of what they put in. Much of the money tends to arrive as retention pay or equity that vests over a set period, which depends on staying. Knowing this changes how to read an offer and how to explain it to the team and to backers. It is a soft landing, not a win, and presenting it as a win can cost trust with early supporters.
How to apply it
- Treat interest in the team over the product as the signal that an offer is an acquihire.
- Separate the headline price from the retention package. What matters is what reaches the bank after vesting.
- Read the term sheet for what happens to investors, to existing equity and to the product.
- Negotiate for the team first. Founders who protect everyone's terms keep more goodwill than those who protect only their own payout.
- Tell the team early what changes: a new employer, a new contract and often a product that closes.
What it is
In a normal acquisition, a buyer pays for a business: its customers, revenue or technology. In an acquihire the buyer wants the people, usually a small team of engineers or specialists with skills that are hard to hire. The product may be retired, and the founders and staff join the buyer as employees. The word joins "acquisition" and "hiring", and is also written acqui-hire.
Common mistakes
- Comparing the offer with a full sale of a working business, when it is closer to a hiring deal.
- Ignoring the notice period and the product's customers, who still need a clear end date.