5 Tips for Getting Acquired
Grow Your Business, Not Your Inbox
Apple’s cash reserves, the latest astronomical Google acquisition, your buddy who just got a seven-figure infusion from some venture capital firm -- when you run in startup circles, it can seem like easy money is all around you.
It’s true that major tech players have developed an acquisition mindset, with entire divisions focused on identifying and procuring the next great startup. Even key businesses in non-tech industries, like food services and shipping and logistics, seem to be acutely aware of both the growth and self-preservation effects of absorbing smaller competitors or startups with complementary products or services.
Young entrepreneurs considering acquisition as an exit strategy need to understand why companies are bought in order to best position themselves. Here are five ways to get your startup in line to be acquired:
1. Make sure you have market appeal.
As a young entrepreneur, your product must have legs. Not only should customers clamor for it, it should be a disruptive force in your market. Acquirers want to give money only when they know they'll see an attractive return. While it’s the paying customers who will be the judge of the value and potential for your startup, it’s the acquirer who will take notice.
2. Make it essential.
Meeting consumers’ needs may make you the next big deal. When you are essential to a consumer’s lifestyle or provide a product or service that offers real, bottom-line value to a business, your company will be needed, not just wanted. Acquirers will find this attractive, as gaining customer loyalty and maintaining long-term relationships will help generate income on a regular basis.
3. Streamline adoption.
Your solution, product or service should be as easy as possible to consume, integrate and use. The greatest startups of the last decade have all spent considerable time focusing on eliminating barriers. Don’t make the rookie mistake of overpromising and under-delivering. The easier your product is to incorporate into a customer’s life, the more likely it will happen. And that has a big impact on both your bottom line and your investors.
4. Hire and retain the best talent.
A main reason large companies acquire startups is for talent. Good startups usually start with great talent but few do a good job of consistently raising the bar for their staff or thinning out those who made sense for a startup but don’t work well for a maturing business. It’s critical to prepare your company culture to support optimization and expansion. By doing so, you will position yourself as an innovative company trying to stay ahead of the curve, and you’ll attract more talent looking to join these types of settings. It’s a self-fulfilling prophecy and one that will boost acquirers’ confidence.
5. Control the bottom line.
Efficiency matters. The more efficient and concentrated your expenses are, the more credibility you’ll have with investors and acquirers. While working lean is key, another key component is the amount you have at the end of every year to invest in the company’s future. Money spent on corporate entertainment or posh office space is money not spent trying to get ahead of your competitors. Maturity is key to the overall financial health of your business -- make sure your team is making smart, strategic decisions with every expense. By keeping costs low, acquirers will have a clear view of your priorities, and they will have more confidence in your ability to manage your company to its ultimate goal -- financial and marketplace success.
When you’re making good money off a customer base that can grow and with a product or service that can scale, companies are going to start coming out of the woodwork to acquire your startup.
What are other factors startups should take into consideration when wanting to be acquired? Let us know in the comments below.