Acquiring a company is complex and challenging, and in some instances, unnecessary. If buyers only need the people inside of a target company, they can do an acquihire instead of a traditional acquisition To explore this strategy deeper, this article will discuss executing acquihires, featuring Thomas Gorman, Strategy & Corporate Development at Pantheon, and Mark Khavkin, CFO at Pantheon.
"In an acquihire, you must focus on retention. You have to ensure that the people who join your company stay in your company long enough for the thesis to make sense." - Mark Khavkin
An acquihire is an acquisition, but with the sole purpose of acquiring talent. In most cases, buyers don't acquire the company or legal entity, which reduces risks. In addition, due diligence is no longer necessary, as the buyer is not inheriting the company's liabilities.
The goal of an acquihire is to attract talent, such as a cohesive team with niche expertise, to perform a specific task or objective. Often, these are people with specialized skills, such as engineering or project management.
Acquired people can leave anytime they want unless they voluntarily agreed to stay in the company for a specific time in exchange for a retention bonus. Because of this, buyers must focus on retention.
There are also instances where acquihires will include non-key employees, even though acquiring non-key employees results in additional costs.
Buyers often retain non-key employees to increases their chances of retaining the key employees. In short, buyers must dedicate resources to maximizing retention.
Lastly, because acquihires usually involve small companies, they are less expensive and often don't get the commitment and focus they need from executives.
One of the most significant advantages of acquihires is that the buyer gains access to a group of people who already know how to work together. But other than that, an acquihire process is similar to a regular hiring process.
Like a typical hiring process, buyers must find a way to motivate and ensure that the employees want to be a part of the organization's mission. Unfortunately, there is no clear-cut way to retain skilled employees.
Buyers must look out for cultural fit if the acquired employees must work with existing teams. However, suppose the acquired employees are a specialized group working on an adjacent project. In that case, buyers must ensure that the group can operate independently to achieve their objectives without getting caught up in the bureaucracy of the acquirer.