Acqui-Hires for Growth: Planning for Success

A new M&A buzzword, the “acqui-hire,” reflects competition for talent through acquisitions in today’s hot technology market. In an “acqui-hire” the buyer is motivated primarily by the talent of the seller’s employees rather than by its operating business or technology — which may still be under development.

Facebook CEO Mark Zuckerberg, in an often-repeated quote, told a 2010 audience that “Facebook has not once bought a company for the company itself. We buy companies to get excellent people.” During the past three years, which have been characterized by rapid change in the technology industry and the explosive growth of new household names in social media and cloud computing, large-cap public companies and venture-backed companies alike have competed to amass critical talent. Recent examples of talent-driven transactions include Twitter’s acquisitions of Summify in January 2012 and Posterous in March 2012, Google’s acquisitions of Milk in March 2012 and RestEngine in May 2012, Zynga’s acquisitions of area/code in January 2011 and Buzz Monkey in June 2012, Groupon’s acquisition of ditto.me in April 2012, LinkedIn’s acquisition of IndexTank in October 2011, and Facebook’s acquisitions of Lightbox and Glancee, both in May 2012.