How to Know When Your Startup Is Being Acquired

You took that job at a fun startup, and things were going great… at first. But a year in, things have changed drastically. Suspicions arise that the company is being acquired. How can you tell what’s really going on?

Chances are, your company – big or small – won’t tell you it’s being acquired, or even in talks for an acquisition. Unless you’ve made a good friend well above your pay grade, you’ll just have to examine the evidence to know if your business is being purchased.

Luckily, these things tend to follow some trends. Here’s what to look for:

Weird Reorganizations

Did your company recently decide HR and the design team need to report to the same Vice President? Did that make you sit back and think “WTF?”

It’s not just you. That’s a weird corporate move. But these seemingly nonsensical reorganizations make sense somewhere, to someone, somehow.

Perhaps that VP in charge of HR and design is being groomed for a role within the new company, and showing they can run two different and equally successful branches of the existing business is their “final exam.” Maybe your company is trying to toy with payroll reports a bit, making the numbers look better to the larger firm eyeing the acquisition. Who knows.

What we do know is some of these re-orgs echo the company buying yours, whether you’ve heard about the deal yet or not. If there’s a handshake deal in place, your small firm may be asked to reorganize their chart for better integration with the purchasing company.

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Projects Die Via Acquisition

Your team has been working hard on a new in-app feature for over a year, and it’s almost ready. Launches are so exciting!

But your manager refuses to greenlight it. They say something about meetings amongst the c-suite crew, and holding off until next quarter. There’s no further explanation.

This is your clearest signal that something is wrong. Your manager once read you the riot act for not having code ready weeks ago, and now the whole project dead in the water. What gives?!

It’s like a big game of telephone: someone three steps up from you heard about an acquisition, and told their direct manager to hold all projects back. That person told your boss to sit on new projects until he had more context on what was going on. Your boss just knows they can’t move forward. You’re left catching up on bug fixes, hoping nothing breaks the new build.

”We’re Hiring!” (Just Kidding)

Your company’s social media feed is still tweeting about jobs, and proclaiming you’ve got a great culture, and there are still positions available. The problem is, your company isn’t hiring.

Your team might really need two more developers, but those spots just aren’t being filled. It’s a burden on existing staff. Everyone is burnt out and tired of picking up slack – and they don’t get why it’s so difficult to put someone at that desk.

A prospective buyer will want as little overhead as possible, and salary is all overhead to them. It might mean more work for you, but the purchaser is looking harder at the bottom line than your work-life balance.

Where’s Your CEO?

You might not lay eyes on the CEO daily, but they’re a visible part of the company. They may be tied up in meetings, but their presence is a good sign they are pushing hard to make your company a success.

Then, they’re just not there. When they are, it’s closed-door (or off-site) meetings. They come in at 10 AM and leave by 2 PM, and often wear suits – a direct affront to the ‘cool’ laid-back culture they cultivated.

When your ‘I surf on the weekends, nbd guys’ CEO is suddenly wearing ties daily, it’s a sign they’re in meetings with other companies. It’s especially curious if they’ve acquired an assistant who never leaves their side.

Startup Money Flow Issues

When you started at this company, they were very clear the business was taking venture capital. That’s typical of a startup, so you didn’t think it was a problem.

You were probably provided milestones for more VC funding when you started. The company was very clear about its roadmap, funding, and path to profitability.

But the Fall funding round never came. It’s Spring, and you haven’t seen an announcement that the company has more money and a new valuation. You ask around, but nobody seems aware of any new funding. Word on the street is your CEO isn’t taking meetings with VC firms, and hasn’t for a while.

It’s another sign of an acquisition. More VC funding means more entities a purchaser has to appease, and that’s not attractive. If a deal has been in place for a while, that company may be funding yours already.

Acquisitions Aren’t Always Bad

Would you rather die a slow death at a small company or live to fight another day at a larger one? We’re guessing you’d rather keep your job.

Do you love the projects you’re working on? Is the work meaningful? If those are true statements, and your new company is welcoming to you and your team, a logo change might be the biggest shift you can expect.

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