Ask HN: How much should a bootstrapped startup ask for an acquihire?

I&#x27;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:<p>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 &quot;favors&quot; 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.<p>No VC, no favor.<p>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&#x27;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&#x27;ve never met before or someone who has been vouched for by someone you respect and trust.<p>Again this is all other things being equal.<p>So if I&#x27;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.<p>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.<p><a href="https://en.wikipedia.org/wiki/Best_alternative_to_a_negotiated_agreement" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Best_alternative_to_a_negotiat...</a>

Don&#x27;t negotiate against yourself.<p>This question is all about how valuable you are to that company. Does hiring the team and getting the technology increase their profits by 10%, 100%, 1000%? How much value are you bringing to the new company?<p>And don&#x27;t devalue yourself because you aren&#x27;t VC funded. Don&#x27;t negotiate against yourself into saying a lower number. Find out how much you think your worth and come with your thoughts to the table and negotiate with the acquihiring company.

Its 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?<p>A much better way to start this process is to do a fund raising exercise. How much would you expect the company to be pre-money and post-money, and why? If you have been unsuccessful raising money it is possible your post money valuation expectation is too high. At the end of the day though its value not a &#x27;rule of thumb&#x27; for these things.<p>People will use the &#x27;rule of thumb&#x27; to cross check the value of their offer. If they feel like they are only in it for the employees and offering more than a &#x27;typical&#x27; acquihire they will need to understand why that is. If less then that is another data point.

Most likely $0. If you don&#x27;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.<p>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 relationship with them. If your dream is really to get acquihired your best bet is to pull together enough traction to raise seed funding and then invest that money in hiring the best engineers possible before shopping it around to get acquired.

More than they&#x27;re willing to pay.<p>This is far more about negotiation than market rates. Who cares how much VC funded companies get, start by asking for 3 to 5 times what they are getting.<p>Flip the conversation, being bootstrapped, and having a dedicated team means you have no pressure to leave, so they must entice you with more money because you have no market forces acting against you.<p>Also, your team is there because they love you, not because your paying them, again another reason for them to give you more money.<p>VC repayment is tangible, it&#x27;s easy to figure out how much VCs need to be made whole, loyalty and dedication are far more intangible and valuable.<p>If you negotiate like that you&#x27;ll figure out pretty quickly whether they really want your team or whether they are trying to fill 4 seats.

A point on negotiation strategy-- find out what the other side wants, let them make the first offer.<p>Recommend reading Roger Dawson &gt; <a href="http://www.summarist.net/book/secrets-of-power-negotiating-15th-anniversary-edition-inside-secrets-from-a-master-negotiator/" rel="nofollow">http:&#x2F;&#x2F;www.summarist.net&#x2F;book&#x2F;secrets-of-power-negotiating-1...</a>

I&#x27;ve started and sold a bootstrapped company. My partner and I sold for $2m, and I ultimately regretted it.<p>I would focus on how much money you make on deal close. You might think to yourself, &quot;Hey, I&#x27;m totally going to vest that 2 year period, why wouldn&#x27;t I?&quot; But the post acquisition phase can be extremely depressing and stressful. I developed bruxism and ended up leaving in less than a year. My health is more important to me than my bank account balance, but it still stings only vesting 18% of a deal. If it weren&#x27;t for the cash on close provision, we&#x27;d have made much less.

If you have no investors to answer to and very little debt, then there is no number. But here are some factors in play:<p>-Do you still believe in your idea to the extent you want to grind it out and see some serious upside?<p>-If there is serious upside potential and you want to bake that into the price to still see a nice reward then do that.<p>-If you&#x27;re okay with not pushing through on this startup and realize it&#x27;s not going to take off (or likelihood is low) AND you want to work for this company, be happy taking some lower multiple on your salary. $1MM per employee is probably a high amount if you have no revenue or customers or investors, but if you don&#x27;t care about losing out on $200K, then shoot for the moon and negotiate as hard as you can.

Do you know why they are acquihiring you?<p>Bootstrapped or not, VC funded or not, profitable or not, a company&#x27;s value is given by its potential. This potential will be measured (with different metrics, some of them quite subjective) by both parties, then negotiated hopefully to somewhere in between. In your case, you need to come up with your number by best estimating what the value of your team will be once acquired and assigned your new task.<p>Ie. you are making a cool AI board but you got no traction (hence no VC, revenue or customers). Now Intel wants to acquihire you to make their next generation of synaptic chips something cool. Just lately IBM closed a deal valued at $100M with a Chinese manufacturer for their synaptic chips. Since they are looking at an internal BP for the acquihire of a $100M potential, a 10x ROI puts you all at $10M. Now you have your own BP that you can use to support your intended price for the deal.<p>Once you have that potential value, you will want to figure your opportunity cost and BATNA by looking at the potential value of your product or company in X reasonable years. This will be your leverage for negotiating.

There really isn&#x27;t a market price unless you have a couple of bidders interested in you. That&#x27;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.

Enough to make it worth your while, what that means is entirely up to you.

Acquihires are bought not sold.<p>Your acquirer will have some sort of price formula they use for these things and will have a price in mind usually. It&#x27;s also hard to pin down exact numbers as they vary wildly by who is doing the acquiring.<p>You should dig a little and see if they&#x27;ve acquired anyone of a similar size and peg to that.

I see that number thrown around a lot as well. Unsure exactly what it means and how accurate it is of most acquihires.<p>Does $1M include salary over X years? Is it just the retention? How much is paid up front?<p>How mature is the product you&#x27;ve been working on? Is it something you&#x27;ve been doing on the side with your co-founders? How much time has been put into what you&#x27;ve done; both as a product and as a team.<p>You&#x27;ll have to see what they&#x27;re going to offer. I imagine you don&#x27;t have much leverage though so the final price will be in the ballpark of their offer.<p>My email is in my profile, feel free to ping me for personal experience with this.

If they&#x27;re not buying any product or technology, I don&#x27;t understand why a company would pay more than zero. If it&#x27;s common for companies to pay &quot;$X million per engineer&quot; to simply acquire people, then from the employees&#x27; point of view, why even job hunt the traditional way? Wouldn&#x27;t it make more sense to get a few engineering buddies together, form a 2-3 member LLC, and shop around for an acqui-hire? You&#x27;d get jobs AND million-dollar &quot;signing bonuss&quot;.

As somebody who was in your shoes (bootstrapped, low revenue) and recently acquihired I can tell you the only thing that drives your value is the perceived (a) time to market acceleration and (b) team potential. Focus on these during negotiation and come to grips that without revenue, customers, or killer tech you are not going to see a huge exit. Our asset purchase + employment contract value was ~$1MM.

If you don&#x27;t have revenue or customers you shouldn&#x27;t be looking for someone to acquire you. Chances are, if you had a truly disruptive product and you were in the industry&#x2F;segment that the acquiring agency worked in they would come to you - but if that was the case you wouldn&#x27;t be asking the question here.

Treat it like you would treat any other deal, you&#x27;re selling the company. Whether or not it is an acquihire is not up to you but to the acquirer so sell it for what you think it is worth for them <i>if</i> that price is higher than what it is worth to you.

I think you should think about it as a multiple of what you would expect per-employee were the company to hire everyone off the street. So if you would get 10k options &#x2F; employee off the street, what multiple of that is it worth to get the full team.

As much as you can get. Start high and negotiate sensibly. Don&#x27;t overvalue based on silly things like huge purchases that Facebook made, but don&#x27;t be a fool and lowball yourself because you&#x27;re afraid to ask for a lot.

How much has doing the startup cost you. If you&#x27;re bootstrapped you&#x27;ve probably both put personal funds in as well as a salary opportunity costs.<p>Thats your base.<p>Now you need to find a multiplier for the opportunity you&#x27;re giving up. Have fun with it. Say you&#x27;d think you could sell your company in 2 years for $20M. Say there&#x27;s a 10% chance of that happening. That $2M. Divide that by number of founders&#x2F;employees. There&#x27;s your markup. Maybe you add some padding to leave room for negotiation.<p>At the end of the day you need to also find some sort of bottom line. How much are you willing to take to give up to take a normal job (noting you&#x27;re probably locked in for a year or two)? With my business it&#x27;s enough to pay off my house. Thats the least amount I&#x27;d take to sell my business (not a startup, bootstrapped services)

I 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.<p>Just say the number you want, and see what happens.

I have a closely related dilemma more around the salary negotiations involved in the acquihire... How much should the cofounders ask for?

Is the correct answer not &quot;the largest amount that the acquiring company will pay&quot;?<p>I think that this is a question that is impossible to answer.

I would say enough to buy a house, which is in the range of 750k-1.5m. This range would go up as the housing price goes up.

I don&#x27;t think &quot;acquihire&quot; is the correct term. This seems like a company hiring 3 guys...