Acqui-Hire
An acquisition made primarily to bring on a company's team, rather than for its product, revenue, or IP.
An acqui-hire is an acquisition where the buyer's primary interest is the target's engineering or leadership team, not the underlying product or existing revenue, which is often shut down or deprioritized shortly after closing. Deal values are typically modest relative to how much venture capital was raised, since the company itself usually isn't the valuable asset.
Acqui-hire proceeds are commonly structured so that most of the deal value flows to retaining and incentivizing key employees (through new-hire packages, retention bonuses, and equity at the acquiring company) rather than through the standard liquidation preference waterfall to shareholders, which can leave common stockholders and even some investors with little to nothing.
If facing an acqui-hire outcome, negotiate hard for the team's retention packages and be transparent with the cap table about what shareholders can realistically expect — acqui-hires often return little or nothing to common stockholders even when the deal headline sounds respectable.
Do investors usually get their money back in an acqui-hire?
Often not much — acqui-hire deal values are typically low relative to capital raised, and most of the deal value is frequently allocated to employee retention rather than distributed through the standard shareholder waterfall.
Related terms
Run the numbers yourself: dilution, SAFE conversion, and fund-returner calculators.