Top Menu

Are there any limits to the acqui-hire strategy for growth?

Unless you’ve been hiding under a rock or smoking rocks, you’d know that Yahoo’s been on an acquisition tear lately. In fact, Yahoo’s been gobbling up so many companies that it has racked up close to two dozen acquisitions. The good news for Yahoo stockholders is that, with the exception of Yahoo’s buyout of Tumblr, most of these acquisitions were for comparatively small amounts of cash. These acquisitions were made primarily to arm Yahoo in its attempt to become more relevant in the age of mobile apps and content. Instead of coming up with technologies in house with its own staff, Yahoo buys companies with staff with know how that can help Yahoo with its current projects. No wonder, many of these acquired companies shutdown after the acquisition. This strategy, on the surface, makes lots of sense. You don’t start from scratch since you’re buying an established team. You are buying expertise your current employees don’t have. You are paying cents on the dollar since these companies are mostly in the startup stage and can be bought out cheaper since their products aren’t making stellar sales yet. Finally, this strategy allows Mayer-led Yahoo to be more nimble when identifying and capitalizing on new opportunities.

While the reasons outlined above are quite compelling, the downsides are quite compelling too. Sure, acqui-hires can give you the heads you need to pursue your current initiatives but these new teams might not mesh well enough to produce optimal results. Moreover, you are acquiring entrepreneurs as well as employees. While these folk obviously want to work for your organization, they have developed certain working and managing habits and meshing these with how your organization works might be a challenge. The bottom line is that any company looking to use an acqui-hire strategy needs to weigh its benefits thoroughly against the challenges it poses. The synergies might not be too obvious after such a rigorous analysis.

, ,