[rayiner]

I don't understand the point of talent acquisitions. Couldn't you spend half the amount of money you would have buying the company just giving the developers enormous signing bonuses to come work for you? Why buy out the original investors in the target company when it's the developers you want?

[Domenic_S]

It's really just a huge premium to get a team of people (this is important) who have built something similar to what you want to build (also important).

And you get the IP as well, which is nice. In some cases you're consolidating power and shutting down competitors. It makes a lot of sense in some situations.

[rayiner]

If you paid half that premium to the members of the team, you'd be much more likely to get them all to come over as a bloc than you are by purchasing the company. And you'd have the other half left over for hookers and blow.

Unless you value the goodwill or IP of the target company, it makes no sense to buy out the original investors of the target company.

[drewcrawford]

You consider the position of the hirers, but you fail to consider the position of the investors and the founders. Why would they be incentivized to accept this offer?

First: why would the investors of a company allow the team to be bought out from under them? A good investor will align the incentives so that the founders are incentivized to exit at the same time as the investor.

Second: why would a founder of a successful company accept a hiring deal? Most founders (heck, most developers) turn down several job offers before the second cup of coffee. And even if the $ paid to founders for acquisition vs pure hire is identical, there is an important psychological distinction between being bought and being hired that affects both the negotiations and the status and authority of the "employee" at the acquiring company and thus their wellbeing and autonomy. These factors matter.

[rayiner]

If you want the employees, and not the assets of the company, who cares about the investors and founders? They're not parties to the transaction. How could they stop the team from being "bought out from under them?"

[gfodor]

Usually the founders are key members of the talent being acquired.

[gfodor]

Consider the potential fallout of trying to do a "hostile acquihire" -- first, you will kill the relationships with the startups investors, second, you will put the founders in a position where they are screwing their investors. Who wants to go work for a company that undermines your business relationships?

[rayiner]

People do hostile acquisitions in other industries all the time. It's just business. Indeed, it's verging on anti-competitive to have some "gentlemen's protocol" as a way to keep investors happy. You're not buying anything the investors own (the good will and IP of the company), so why should they get paid?

My guess is that Google, etc, do this for anti-competitive reasons, as a way to keep engineer salaries from getting bid up. There seems to be a cultural stigma with paying much more to some engineers than others, which is why they don't just offer everyone at the target company a $250k signing bonus to come on board instead of cashing out the target company's investors.