Acqui-hires explained: how they work and recent examples

Thinking of making the next big move with your company? Whether you’re a startup or a more established company, you’ll have lots of options available to help you take the next step.

One popular move in recent years is acqui-hires, where companies buy other businesses in order to access high quality talent and personnel with specialist skills.

In this comprehensive guide, we’ll be exploring what acqui-hiring actually is, how it works and the main benefits of this strategy. We’ll also look at some recent high-profile examples of acqui-hires in action, with a particular focus on the tech world.

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What is an acqui-hire?

Aqui-hiring is the process of buying another business for the main purpose of acquiring talent - rather than products, assets, technology or intellectual property (although some or a mix of these may also be included as part of the deal). The name - if you hadn’t already worked it out - is a mix of ‘acquisition’ and ‘hiring’.

The aim of this strategy is to acquire expertise quickly, rather than having to grow or hire an in-house team. Through acquisition, the buyer can gain a talented and fully functioning team. It’s a potential option for growing businesses in need of highly skilled workers, or those moving into a different or highly competitive field.

Acqui-hires is a very popular strategy within the tech world, where a larger company typically snaps up a smaller one - often a startup.

A common thing that happens in an acqui-hire transaction is that the acquired company’s original products and services are scrapped. They may be phased out or significantly altered, with the team redirected to focus on the acquiring company’s projects. This is because the focus of the transaction is on the rapid assimilation of personnel with particular skills, rather than any other qualities of the acquired company (such as its products or services).

How does acqui-hiring work? A step-by-step guide

Here’s a quick look at how a typical acqui-hire transaction may take place, step-by-step:

1: Identifying a target

The first crucial step is to identify a suitable target. The acquiring company will be proactively searching for smaller companies which have a team with the skills and expertise they’re looking for. Cultural fit is also important for the integration stage of the process, when the new team is merged into existing teams.

2: Initial conversations

Once a shortlist of targets has been drawn up, the acquiring company will aim to make first contact with target companies. Initial conversations will begin, with the primary aim of identifying which targets would actually be amenable to an acquisition.

Another key goal is to gather information about the company and its finances.

3: In-depth valuations

In order to make a reasonable and competitive offer, the acquiring company will need to put together a series of valuation models.

They need to know as much as possible about the target company and its board of directors, as well as its finances, products, goals and everything else relevant to the acquisition.

At this stage, the acquirer will typically ask the target company to provide substantial information - usually relating to the financials of the business. This information can be analysed, to check that the business is suitable for acquiring and to come up with an accurate valuation.

4: Making an offer

With valuation work complete, the acquiring company can put forward an offer proposal to the target company.

5: Negotiating the terms

Negotiations on price are common in acquisitions, but there will also need to be lengthy and in-depth discussions on the terms of the deal.

There are lots of factors to consider, from corporate law and securities regulations to anti-trust laws and tax implications. The timeline for the acquisition will need to be set out, along with conditions that need to be met on both sides before the deal can be successfully closed.

6: Carrying out due diligence work

Before any contracts can be signed, extensive due diligence work needs to be carried out.

Specialist solicitors will delve into every aspect of the target company’s operations, analysing everything in granular detail. They'll examine the company’s financials, assets and liability, human resources, customers, patents, technology, market position, leadership structure and much more.

The aim is to confirm that the acquiring company’s valuation is correct, and to root out anything which could sour the deal or affect the valuation.

At this stage, any problems, concerns or discrepancies will need to be addressed before the transaction can proceed.

7: Signing contracts

With the offer accepted and extensive due diligence processes completed, it’s now time for a final sale contract to be drafted. Once everyone is happy with the contract down to the last detail, both parties will sign the agreement.

8: Closing the deal

One of the final stages is closing the deal, which usually involves last-minute checks and the signing of documents. Legal steps for the transfer of ownership will be initiated, along with arrangements for the transfer of funds.

9: Announcements, communications and transition

The timing, wording and tone of any announcements as the acqui-hire deal is finalised needs to be very carefully handled. The acquiring company needs to put plans in place to minimise disruption and ensure operational continuity.

They also need a carefully crafted communications strategy, to highlight the benefits of the acquisition to all stakeholders and let staff know what happens next. Transparency and clarity are essential at this stage.

10: Integration and role assignment

The very last stage of the acqui-hire process is one of the most important. It’s where the new team is integrated into the acquiring company, assigned to projects and welcomed into the culture of the business.

During this phase, it’s crucial to ensure cultural assimilation happens smoothly, as well as making sure the right roles are assigned to the right people based on their strengths, skills and experience.

Retention strategies will also come into play at this stage, as there could otherwise be a risk of losing newly acquired talent to competitors - after such a substantial amount of time, effort and funds have gone into acquiring them.

Pros and cons of acqui-hire as a strategy

Now, let’s take a look at the main benefits and drawbacks of acqui-hiring as a strategy, considering the perspective of both the larger acquiring company and their smaller target.

Pros:

• Provides a practical and speedy exit for struggling startups which have skilled employees and unique expertise
• Offers the opportunity to acquire an already functioning team of talented professionals with specialist skills
• Offers access to hard-to-hire skills, particularly in AI and technology fields
• Can be cost-effective compared to hiring talent individually, especially considering the high salaries and benefits needed to lure talent away from competitors.
• Provides a more certain and successful future for employees.

Cons:

• Employee retention risk - some employees may choose to leave the company after the acquisition
• Cultural and integration friction - without adequate research and a strategic plan for integration, there’s a risk that the two companies may not be a good cultural fit. This can lead to friction between new and existing employees, and between the ways of working between the two companies.
• Lower founder payouts - as an exit strategy, acqui-hires may not be as lucrative for founders as traditional acquisitions
• A significant capital outlay is required, so this strategy may only be feasible for larger companies.
• The initial product or service may be abandoned or deprioritised, which can be demoralising for the employees who worked on it.

Recent examples of acqui-hires in action

To get a better idea of how acqui-hiring works and its benefits as a strategy, here are some recent examples of high-profile acqui-hires over the last few years.

Twitter buying Periscope (2015)

In 2015, Twitter (now called X) acquired the live video streaming app Periscope. While the app wasn’t abandoned and was integrated into Twitter’s platform, the main purpose for the transaction was to secure the talented team behind its development. This strategic move helped the social media platform to enhance its live streaming capabilities.

The exact price of the acquisition wasn’t made public, industry insiders estimated that the amount paid was around $100 million USD.¹

Microsoft’s unusual Inflection AI deal (2024)

In 2024, software giant Microsoft made what was widely considered to be an acqui-hire deal with US-based machine learning company Inflection AI.

What was considered unusual about the deal though is that instead of buying the company outright, Microsoft paid what was described as a “licensing fee” of $650 million USD² to use its AI models and hire most of its employees. This included the current CEO Mustafa Suleyman.

This sparked concerns over anti-trust law violations, with some accusing the company of aiming to avoid a government anti-trust review by paying a “licensing fee”. However, the deal was cleared and it was widely considered to be a success, even despite the poaching of top staff from the Inflection AI board.

Google hiring Windsurf executives (2025)

In an effort to advance its coding capabilities, Google appeared to follow Microsoft’s example as it reportedly paid a huge $2.4 billion in “licence fees” to AI code generation startup Windsurf in 2025.³ This happened under the nose of rival OpenAI, which had previously made an attempt to buy the startup.

Under the terms of the deal, Google was able to use some of Windsurf’s technology - and most importantly, bring key personnel from the research and development team over to Google’s DeepMind AI division.

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Sources used:

1. TechCrunch - Twitter Confirms Periscope Acquisition, And Here’s How The Livestreaming App Works
2. QZ - Microsoft's weird Inflection AI deal is now in the antitrust spotlight
3. Reuters - Google hires Windsurf execs in $2.4 billion deal to advance AI coding ambitions

Sources last checked 27-Oct-2025