Acquihiring
Acquihiring is the strategy through which Growth stage Startups or leading companies purchase small Startups for their talent value as a smart recruitment and investment plan. It is the latest trend in the Indian corporate sector that is rapidly becoming popular.
Startups are often preferred for acquihiring due to the high engagement level and entrepreneurial experience of their talents. It is an effective, robust, and relatively easier pathway to attract the available new-age talents at a team scale.
Why is acquihire a good exit option for failing startups?
The Startup Ecosystem in India is witnessing the latest and exciting trend of acquihiring in the last few years and it is gradually gaining momentum. Leading companies in E-commerce, IoT, Data Analytics, Virtual Learning, AI, Autonomous Delivery, Tele-health, and Robotic Process Automation are actively seeking highly motivated, entrepreneurial, and tech-up-skilled Start-up talents.
For Startups that are faltering and struggling to make the desired impact or scale-up, acquihiring presents a great option. The value of their stellar team gets duly recognized through a viable option to get engaged in a new company that highly values their skills and talents.
The acquiring company en-masse recruits and retains the talented team for working on new products/services to boost its growth. The Founder gets the right exit option to channelize the ambition and entrepreneurial energy for a thriving new venture. The team gets absorbed into a new project to implement their ideas and experiential learning in an ambience of financial stability and growth.
Benefits of an Acquihire
In the ever-expanding and dynamic Start-up ecosystem, the demand for top-performing talents is ever-increasing like never before. Several large corporations regularly face talent crunch and are frequently on the hiring spree. The demand-supply imbalance is specifically severe in technology and emerging sectors.
Acquihiring offers an immense value proposition for these companies to access highly skilled and motivated talent to enhance the existing portfolio and develop innovative capabilities. Most often, seed-stage/nascent small Startups are acquihired by the larger players in the business.The hands-on unique market intelligence, proficiency in the latest technology, and IP developed by the nascent startups are the game-changer factors for the leading companies that decrease the time for developing innovative products or iterate or hit the market.
In the Indian Startup space, leading global players such as Intel, Walmart, Flipkart, Google, and Twitter to native companies like Airtel, Swiggy, Snapdeal, Urban Ladder, and RailYatri are all opting for acquihiring. In a world where time is money, these firms are opting to acquihire to stay on the top of the competition game and expand market share propelled by the fresh influx of innovative and world-class talents.
Structure of Acquihire deals
The structure and terms of an acquihire deal vary greatly depending on the exact circumstances of the particular transaction. Every acquihire is a unique proposition; talent acquisition and smooth transfer of the team from one entity to the other is the major focus.
Typically, compensation of the employee being acquihired is formulated on an arrangement that is a combination of salary with some stocks, bonus for retention, and premium on services or products if applicable. Most of the agreements are easier on the terms and conditions as the real value is the employees and not the Start-up/company.
In an acquihire transaction, the payment is for acquiring human talent and thus the deal is usually calculated based on per-head. In most cases, the larger companies and leading business players find that the acquihiring deals are worth the price and cost-effective.
Generally, the employees of the Start-up that is being acqui-hired have to undergo the hiring process including the interview. The Founders and their team are offered a distinct treatment over regular candidates. The Management of the larger company that is acqui-hiring considers the prospective hires as highly valuable due to their entrepreneurial talents and tech expertise.
