Acquihire

Hiring six engineers who already work well together almost never happens through job postings. Each seat takes two or three months of posting, interviewing and waiting out a notice period, and once all six have arrived they still need months to learn each other's pace. The work that prompted the hiring hasn't started yet.

A different problem sat on the other side: a company winding down because its product never sold. Closing means splitting whatever cash is left, investors lose what they put in, and a team that spent two years together scatters that week. Something usable was clearly still there, with no way to hand it over.

The trade grew out of those two problems meeting. The buyer skips the postings and takes on a whole team by buying the company. The seller places its people somewhere instead of shutting the door, and returns something to its investors. Large US technology companies bought up small firms on the edge of closing through the late 2000s, and the practice picked up this name.

Read the startup stage as the road a company travels, and this is one of the ways that road ends — though not the kind of ending where the business carries on, as it does after a listing or an ordinary sale. It sits between folding the company and selling it. The scene usually looks like this: a founder who has decided to wind down calls an investor to say it's over in two months, and the investor suggests asking two friendly companies whether they'd buy the team first.

Pricing the deal on people decides everything else about it. It runs in five steps.

1. The buyer names the people it wants. Price follows headcount and role, not code or a customer list. A rough figure that circulated in the US for years was about a million dollars per engineer. Anyone left off the list is left out of the deal.
2. The paperwork is an acquisition, not a hiring round. The buyer takes the shares or the business as a whole. Two reasons to wrap it that way: it creates the channel through which the seller's investors see any money, and the buyer picks up rights to the code and patents the company held.
3. The product usually closes. With nobody planning to carry it on, users get a shutdown date and a few months to export their data.
4. The proceeds are split in order, and this is where the liquidation preference bites — the right, agreed when the investment was made, for investors to take back their money or some multiple of it before anyone else when a company is wound up. If investors are owed four million first and the sale brings three, the founders and staff get nothing.
5. The people who stay are put on retention terms. Half or more of their package pays out over the next two to four years, an arrangement called vesting, where the right to the money is earned by staying.

That last step exists because what was bought is people. A patent stays where you put it; a person can leave next month, and then the price paid buys nothing. So the contract names how many people have to stay, and for how long.

Three places.

The first is the buyer's headcount planning. A company in scale-up mode, growing its organization and revenue fast, puts the deal beside the hiring plan and compares. Salaries and recruiter fees for six engineers hired over a year, plus the roadmap slipping while those seats sit empty, go on one side. The price of one team goes on the other. When the two come out close, the team that already works together tends to win.

The second is the seller's board meeting. A company that never found product-market fit — the state where what you built matches real demand in a specific market — and has roughly four months of runway left, meaning months of cash at the current rate of spending, is down to three options: cut costs and last longer, close, or sell the team. Bargaining power drops as the cash runs out, so this reaches the agenda while half the runway is still there.

The third is press coverage and investor updates, where the word works as a euphemism. "It ended in an acquihire" carries the news that the product didn't sell and the company was priced by headcount.

"This is an acquihire, really. The product closes within six months."

The product isn't on the roadmap after the deal, and the price was set on the team.

"If five of the seven stay, we'll take a look."

Headcount as a condition of the deal. Fewer people staying means a lower price.

"Put the acquihire option in front of the board instead of just winding down."

A proposal to return something to investors and find the team somewhere to land.

Pagedeck had one of these on the table right after its Series A. Nobody was free to fix the editor slowing down on long documents, and a four-person team that had given up on a collaborative whiteboard came up for sale. Theo spent two days in their codebase and reported that none of it was worth keeping but the people were. Grace set the time and cost of hiring four people through postings next to the asking price.

The decision came with conditions. The whiteboard product would close in three months, and half the package would pay out on the assumption that three of the four stayed two years.

The most common misreading is that the headline price lands in the founders' pockets. When the press says a company sold for eight million, it's easy to assume the person who built it received that. The figure is reported against the company and the founder is usually the largest shareholder, so the guess is reasonable. The arithmetic is not. That total mixes the price of the shares with money that pays out to the people who stay over several years, and the share money goes to investors first, in the order the liquidation preference sets. If earlier rounds are owed more than the sale brings, the founders really do get zero. Negotiating against the total means learning what you actually take home after signing, so ask separately what the shares are worth, what the retention package is, and how much preference sits ahead of you.

Treating the retention terms as a done deal is the second mistake. Money spread over several years looks like a reason to stay, yet a large share of people who move through these deals leave before the terms run out. Decisions they used to make themselves now sit below several layers of approval. A buyer who doesn't plan for that is left, two years on, with a closed product and empty desks.