What is Acqui-hiring?
Acqui-hiring is defined as the process of acquiring a company mainly for the purpose of recruiting its workers instead of gaining ownership of its products or services. The word acqui-hiring is derived from the combination of words "acquisition" and "hiring"
An acqui-hiring’s definition is also elaborated as a deal in which a firm is purchased primarily for the people who work there, rather than for the product or service it is bringing to business market.
Read more: What is a benefits package?
What are the benefits of Acqui-hiring
Acqui hiring benefits an organisation not only in terms of its skill pool, but also in terms of improving its community by bringing in innovative entrepreneurial vision. Some of the benefits of acqui-hiring include:
Helps onboard the ideal talent in the company.
Enhances organisational efficiency
Saves time and efforts in sourcing and screening new candidates
Contributes to the purchase of the pool of existing consumers associated with the company being purchased.
What are the steps in Acqui-hiring
The acqui-hiring process varies depending upon the both, buyer and target company. The acqui-hiring company usually determines cost of the acquihire transaction on a per-head basis. That is, for each new person hired, the corporation pays a set amount. An acquihire valuation is determined by their prior work experience and certifications.
The acqui-hiring steps may proceed as follows.
Obtaining legal counsel before and during decision-making.
Gaining permission from the board of directors and stockholders.
Identifying and evaluating post-merger liabilities.
Inquiring about tax issues (parachute payment tax consideration)
Putting the deal together in a way in which the company gets acquired.
Planning compensation for new staff, while existing employees are being laid off.
Ensuring that creditors are satisfied.
Difference between acquihire v/s acquisition
An acquisition takes place when a company is acquired, wherein the acquirer or buyer sets a high value on both, the firm and its employees. On the other hand, acquihire occurs when the acquirer prioritises the employees and their expertise over the products or services of the target company.
The purpose of acquisition is to purchase the majority or all of the shares of the target company in order to gain control of the company. Whereas, the purpose of acquihire is to assemble a well-functioning team and put its employees' skills to work for innovation and growth.
Typically, the target company's employees receive the majority of the purchase money, while a variety of investments and stocks are traded. The acqui-hired firm must accept, integrate, and manage the ambiguity. As a result, both acqui-hiring businesses and entrepreneurs must be aware of the laws and documentation involved in an acquihire deal structure.