There really isn't a market price unless you have a couple of bidders interested in you. That'll set a market price nice and quick. But without a second bidder or at least the threat of one the fair price for them to pay is the minimum it would take to stop you from just walking away and taking a different job. Anyway, your range sounds about right if you have options on the table.
Ask HN: How much should a bootstrapped startup ask for an acquihire?
21–30 of 48 posts
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#22A point on negotiation strategy-- find out what the other side wants, let them make the first offer.
Recommend reading Roger Dawson > http://www.summarist.net/book/secrets-of-power-negotiating-1...
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#23How much has doing the startup cost you. If you're bootstrapped you've probably both put personal funds in as well as a salary opportunity costs. Thats your base. Now you need to find a multiplier for the opportunity you're giving up. Have fun with it. Say you'd think you could sell your company in 2 years for $20M. Say there's a 10% chance of that happening. That $2M. Divide that by number of founders/employees. The…
> How much has doing the startup cost you. If you're
> bootstrapped you've probably both put personal funds in as
> well as a salary opportunity costs. Thats your base.
It boils down to some combination of three things: people acquisition costs, domain expertise value, and technology worth. There's a fourth factor of inherent value of the business itself (outside of technology and people), but the OP stated they have neither revenue nor customers so that's likely a zero. All these are values that the acquiring company can put a number on. Price accordingly.
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#24I have a closely related dilemma more around the salary negotiations involved in the acquihire... How much should the cofounders ask for?
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#25Its still 750K - 1.5M per employee, its not like engineers are less valuable if they are bootstrapped. But a better question is given the businesses involved what values change. Does the acquiring company become more valuable? Is there less competition? Is there intellectual property involved? Customer contacts? A much better way to start this process is to do a fund raising exercise. How much would you expect the co…
Though I think this is a good response, the first part is not correct. The point of an acqui-hire is to acquire talent at an amount that rewards the team for their previous efforts. In a true acqui-hire the acquirer values the product at $0.
No investor would accept less than their principle back, and so an venture-funded acqui-hire is always going to take into account previous rounds of investments.
All this said, a $10m acquisition of a vc-funded co with 10 employees will probably include at least 25%-30% return to investors depending on preference, or else they won't accept.
I would expect to see a 1/3 to 1/2 price discount on a bootstrapped startup, or even more depending on how short a time you've been working on the product.
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#26I know of a bootstrapped startup with 2 employees that was offered $4-5mm to be acqu-hired. It really depends on who the acquirer is, and how much they want you.
Just say the number you want, and see what happens.
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#27I'm going to disagree with the consensus here and say that the price per employee is probably lower when its a bootstrapped company vs a vc funded company, all other things being equal for two reasons:
1) With a VC you have someone in your corner with considerable connections and pull( The VC), to advocate for you. As someone who has been on the acquiring side of the table I think alot of people would be very surprised to see just how many aquihires are either "favors" to the VC or deals that came about because the VC is able to get ahold of the correct person at the acquiring company to make the deal happen.
No VC, no favor.
2) VC funding is a signalling mechanism. Someone, who is presumably a good judge of ideas and talent, has blessed you as worthy and therefore you've passed this bar. The bootstrap company, has not had the blessing and therefor is unproven. Think about it, who would you hire, someone you've never met before or someone who has been vouched for by someone you respect and trust.
Again this is all other things being equal.
So if I'm the acquirer, my question to you is, why am I paying you a per employee premium when I can wait two months for you to shut down and then offer each employee on your team a job at a market salary. That seems to save me a lot of money. Heck why not give each person at your company a blanket offer of employment right now.
If you want to get paid, you need to give the acquirer a reason to pay a premium to aquihrie you. Like others have said, the first, second and third rule of negotiating is to always have a BATNA.
https://en.wikipedia.org/wiki/Best_alternative_to_a_negotiat...
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#28Its still 750K - 1.5M per employee, its not like engineers are less valuable if they are bootstrapped. But a better question is given the businesses involved what values change. Does the acquiring company become more valuable? Is there less competition? Is there intellectual property involved? Customer contacts? A much better way to start this process is to do a fund raising exercise. How much would you expect the co…
Though I think this is a good response, the first part is not correct. The point of an acqui-hire is to acquire talent at an amount that rewards the team for their previous efforts. In a true acqui-hire the acquirer values the product at $0. No investor would accept less than their principle back, and so an venture-funded acqui-hire is always going to take into account previous rounds of investments. All this said, a…
Lets take this apart shall we?
> All this said, a $10m acquisition of a vc-funded co
> with 10 employees will probably include at least
> 25%-30% return to investors depending on preference,
> or else they won't accept.
> I would expect to see a 1/3 to 1/2 price discount
> on a bootstrapped startup, or even more depending
> on how short a time you've been working on the product.
If that is the case, then the assertion boils down to "VCs will hold out for more money", and they get it, so where did the "extra" value come from? We could speculate that BigCo is doing a 'favor' for the VC but really? And from an economic standpoint BigCo is not looking at a material impact on their books. My assertion is that the value proposition for BigCo is the same, VC or not, so the price they are willing to pay "should be" the same. I get that they may want to haggle more, but the acquisition target should understand the game here. There are many BigCo's that are buying engineering teams.
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#29Most likely $0. If you don't have any traction or investors, what makes you an attractive acquihire target? If it were so easy to throw together a few friends and make a million dollars via acquihire everyone would be doing it instead of applying for a job. Acquihire is 30% about getting a team with proven ability to execute and 70% about paying back investors as a favor or a down payment on maintaining a good relati…
If there is no technology play, at the minimum it should be a signon bonus that the company would pay engineers joining at that position in the company. How much higher than that would depend on other factors that everybody is discussing.
Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?
#30I'm going to disagree with the consensus here and say that the price per employee is probably lower when its a bootstrapped company vs a vc funded company, all other things being equal for two reasons: 1) With a VC you have someone in your corner with considerable connections and pull( The VC), to advocate for you. As someone who has been on the acquiring side of the table I think alot of people would be very surpris…
Especially true for a bootstrapped company with no customers and no revenue. In fact, in this case I would actually wonder why the acquirer needs to do an "acquihire" at all. Perhaps that term is being misused here?
An acquihire is generally a buyout of the team, not the technology, the product, or its business prospects. As the team, I would think about how uniquely skilled you are in the domain for which you're presumably being acquihired. Think about your own BATNA, but also think about the acquirer's BATNA. How many yous are out there? How crucial is your team to the acquirer's business objectives? Do you have a sense for specifically why they want you? Is it to build out a new business practice or vertical strategy? A new product? Are you better qualified to do that than the market at large? How much better? How long would it take a deep-pocketed company to assemble a comparable team?
Many (most?) acquihires are indeed VC-mediated. The rest are usually because a team has managed to distinguish itself as a uniquely valuable and concentrated source of talent or domain expertise, such that finding an alternative on the open market, or building one internally, would take a lot of time, money, and false starts. In that case the acquirer's corp dev team probably has a specific calculus it uses to value acquired teams versus building new ones, multiplied in some way by the business upside of the domain or skill in question. If your team operates in a domain with major or mission-critical upside to the acquirer, expect a more generous offer. If your team operates in a nice-to-have, but supporting or uncritical domain for the acquirer, you have less leverage.