5 ms·

I'm curious on the financials behind the acqui-hire deals when the startup is only seed funded with little to no revenue. Valuations based only on the seed amou

I'm curious on the financials behind the acqui-hire deals when the startup is only seed funded with little to no revenue. Valuations based only on the seed amounts and equity doled out seem too good to be true. What kind of purchase prices do we see here and how much do the founders usually get? Would love to hear from members of the communities that have been acquired and are willing to share some numbers.

asanwal 14y ago
Acqui-hires by definition are not a purchase of the startup but of the talent. What we've seen in talent acquisition valuations we've captured is the range is large ($2-$5M/engineer). While these numbers look very appealing, please note that many of these acqui-hires are paid for in part or in whole in stock which vests over time. When the stock is coming from a publicly traded company, it is liquid and so has real value (once vested). When the acqui-hire is done by a private company, and you receive stock, that stock is highly illiquid and the valuation is far from precise. And given market dynamics, that valuation could look very different by the time it vests.
- byoung2 14y ago
  What we've seen in talent acquisition valuations we've captured is the range is large ($2-$5M/engineer). How much of that typically goes to the engineer? I imagine that a $20 million purchase of a 10 engineer company roughly works out to $2 million per engineer, but I imagine the founders and early investors would get the lion's share.
  - asanwal 14y ago
    Unfortunately, don't know the answer to this as even getting the $2-5M number took us some digging. But your assumption is probably right and is only logical in that the "spoils" of an acqui-hire are not evenly distributed across the team.
    - hkarthik 14y ago
      It's unfortunate that there's not much info available yet, as I suspect most folks involved in these kinds of deals are tied up in non-disclosure agreements and need to wait for vesting options to expire before they can open up. I look forward to finding out how the acqui-hires went in about 5-7 years, much like we're finding out about Flickr now.

asanwal 14y ago

Acqui-hires by definition are not a purchase of the startup but of the talent. What we've seen in talent acquisition valuations we've captured is the range is large ($2-$5M/engineer). While these numbers look very appealing, please note that many of these acqui-hires are paid for in part or in whole in stock which vests over time. When the stock is coming from a publicly traded company, it is liquid and so has real value (once vested). When the acqui-hire is done by a private company, and you receive stock, that stock is highly illiquid and the valuation is far from precise. And given market dynamics, that valuation could look very different by the time it vests.

byoung2 14y ago
What we've seen in talent acquisition valuations we've captured is the range is large ($2-$5M/engineer). How much of that typically goes to the engineer? I imagine that a $20 million purchase of a 10 engineer company roughly works out to $2 million per engineer, but I imagine the founders and early investors would get the lion's share.
- asanwal 14y ago
  Unfortunately, don't know the answer to this as even getting the $2-5M number took us some digging. But your assumption is probably right and is only logical in that the "spoils" of an acqui-hire are not evenly distributed across the team.
  - hkarthik 14y ago
    It's unfortunate that there's not much info available yet, as I suspect most folks involved in these kinds of deals are tied up in non-disclosure agreements and need to wait for vesting options to expire before they can open up. I look forward to finding out how the acqui-hires went in about 5-7 years, much like we're finding out about Flickr now.