Acqui-Hiring

Acqui-hiring combines “acquisition” and “hiring.” It’s when a company buys another company primarily to get its people, not its products, revenue, or intellectual property. The target company’s technology or business might be unremarkable. The team is the point.

The appeal is straightforward. Hiring strong engineers or designers one at a time is slow and competitive. Acquiring a small startup that’s already assembled a capable, proven team skips that process entirely. You get people who already know how to work together, which is harder to build than it looks.

The practice is most common in the tech industry, where talent is scarce and the cost of slow hiring is high. Twitter, Dropbox, and HubSpot have all done acqui-hires. In most cases, the acquired company’s product gets wound down. The employees join the acquiring company, often with retention packages attached.

For the acquired startup, an acqui-hire is usually a soft landing after a product that didn’t work out. For the acquirer, it’s a bet that the team will produce more inside a larger organization than they did building their own thing.