July 14, 2014

Why companies are looking to ‘acqui-hire’

As we have discussed in previous posts, sometimes a company will take interest in another company, not necessarily because it wants to obtain its products or services, but because it is interested in gaining a team of talented individuals. This process is often referred to as "acqui-hiring," and many companies see it as a way to recruit top talent. 

A blog post on the website CB Insights describes this practice, noting that when a venture has not performed as well as had been hoped or expected, an acqui-hire can be a good situation to satisfy investors as well as founders. 

The article goes on to explain that between 2012 and 2013, close to 60 percent of tech companies that were acqui-hired were in the Internet sector, while 38 percent were in mobile. According to the article, due the the fact that mobile only comprises a small part of venture capital. The interest in mobile is on the rise as companies seek to acquire talented teams. 

A recent Tech Crunch article reported that GoDaddy made an acqui-hire of the team behind the calendar app Canary. Canary is a "smart" calendar app, and as the article details, "the company's interest was primarily in the talent, not the technology."

It is noted that mobile is an increasingly important aspect of GoDaddy's business, so the acquisition strategy of gaining a talented mobile team seems like a sensible move. 

In some cases, a company may not be doing as well as had been hoped for, but this scenario can actually make an optimal time to be acquired. An M&A advisor can work with your company to determine whether an acqui-hire is a viable strategy for you.