Getting acquired is an exit many startup founders dream about, especially after long days. However, getting acquired isn’t easy and often startups who want to get acquired, don’t focus on the core attributes of their business that make them attractive candidates.
Also, read about the business lessons you can learn from Shark Tank.
With the recent acquisition of Uber‘s Southeast Asian operations by Grab, we’re seeing how the startup playing field can change overnight. However, we’re focused on smaller acquisitions and what larger companies look for in potential acquisition deals.
Here are a few things that companies look out for when acquiring a company.
“Acqui-hiring” is a big thing in Asia, especially for technology talent. What this means is that companies will buy out other companies just to snag your development team or creative team, in an effort to build new departments quickly.
This is a common practice since the dawn of the technology age. Companies have been acquiring patents, technologies, manufacturing equipment, and others, through acquiring the whole company.
It is often cheaper, faster, and more effective than trying to build that expertise from scratch. Think about Microsoft’s acquisition of LinkedIn for US$26 billion – they wanted the platform to take over the online education market.
Apple, like most tech giants, has a reputation of acquiring technologies from smaller companies.
Many traditional brick and mortar companies struggle to build an online presence an dominate the e-commerce market. This is where they buy over smaller e-commerce players in their industry and acquire their distribution channels in order to shore up their online play.
Think Unilever’s purchase of the Dollar Shave Club.
Your customer base
Brands that have a loyal customer base are extremely attractive to companies looking to expand into new demographics. The millennials are a much sort after demographic that is notoriously finicky and difficult to please.
If you’ve built a strong and loyal customer base in that demographic, there would be significant interest from brands looking to secure that demographic.
Related to the customer base is your brand recognition. Having the trust of the consumer and a positive social connotation often makes your company irresistible to larger companies.
Look at how P&G and Unilever has built a large global network of companies that are standalone brands to consumers, but clearly under the umbrella of their parent company.
Brands bring with them trust and positive associations
If you’re looking for that exit, these are a few things you would need to focus on make your company ripe for an acquisition. However, any entrepreneur knows that the journey is hard and the risk is great, so it depends on whether you can last the journey.
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