What is an Acquihire?

Acquihire is the type of business acquisition in which the company primarily acquires another company to gain access to its talented employees, expertise, and specialized skills rather than its products, technology, or customer base. 

The term acquihire is a combination of the words:

• Acquisition
• Hire

In contrast to a regular acquisition, the acquiring firm is not pursuing market share or IP but rather paying for a well-coordinated group of talented individuals, and the original product of the firm being acquired usually stops selling soon after the acquisition.

The Process of an Acquihire

• A group is found: Generally a startup that has good technical or design talent or domain knowledge, one which has perhaps had difficulty gaining momentum or raising additional funds.
• The deal revolves around retention: Payment may be contingent on remaining with the company for some period of time (“retention package”).
• The product is sidelined: As the value to the acquirer lies in the individuals themselves, the original product or service may be put out of commission soon afterward.
• The group joins the acquiring company: Founders and employees become part of the acquirer and may continue with something similar or move on to other projects.

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