A big company wants to acquire us instead of buying our product. How do I even think about this?
The short answer
Treat an early acquisition offer as a signal that you're onto something, not as an exit to grab out of relief. Most first offers are acqui-hires dressed as acquisitions, priced to look big while mostly buying your team on a vesting schedule, so separate the headline number from what actually lands in your and your investors' pockets after preferences and retention holdbacks. Don't run a real process without a banker or an experienced advisor, and never let one buyer set your timeline: the fastest way to a fair price is a credible second interested party.
Go deeper, your way
3 hand-picked resources, 3 link-checked. Pick how you want to dig in.
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Why we picked it
It walks a worked example where an '$8M exit' headline collapses to roughly $1.9M net in the founder's pocket once you run the liquidation waterfall (1x preference paid first, unvested equity cancelled, most value re-routed into the acquirer's new-hire RSU package). This is the exact math the house answer is warning you to do before you get excited about a number.
An acqui-hire is a team hire dressed as an acquisition: model the cap table waterfall before you react to any headline price
Your existing unvested equity usually gets cancelled and reappears as the acquirer's 4-year RSU grant, so 'the offer' is partly just a future salary you have to stay to earn
Investor 1x preferences are paid before founders and common see anything, which is why a small price can leave you and your team with little cash
Why we picked it
A repeat founder who sat on both sides of the table lays out how to run a lightweight seller-led process at early stage, and states the core lever bluntly: 'Create the perception (through reality) that there is an alternate bidder, always.' It covers reading real buying signals and building acquirer relationships long before you need them, which is how you avoid letting one buyer set your clock.
Why we picked it
The India-specific reality the global pieces skip: how Indian acqui-hire consideration gets split across upfront cash, salary hikes, ESOP swaps, joining and retention bonuses and investor payouts, and why loading more onto the share purchase price (capital gains) beats loading it onto salary/bonuses (taxed as income). It also names what actually kills these deals here: disagreements on lock-ins, designations and which team stays.
In India most acqui-hire value arrives as salary, ESOP swaps and retention bonuses, not a clean cash price, so structure consideration toward the share price for tax efficiency
Buyers pay up for strong, well-balanced teams (roughly 1.5x to 4x revenue via ESOPs/bonuses), but 'very few deals are seller-friendly'
Deals most often collapse late over lock-in periods, joining designations and which teams get retained, so negotiate these explicitly, not the headline number alone
