alien abduction

"Acqhiring" Steps Out of the Shadows

As the economy improves, employees get restless and most companies twiddle their thumbs about investing in retention efforts as the war for talent once again heats up. Recruiters are starting to emerge from hibernation, their poking and prodding coming precariously closer to the top talent at rival firms. The best employees on the market are the prize and everyone is on the market.

But recruiting is so old school.

There's a new fad afoot, according to a recent New York Times article by Miguel Helft. It's called "acqhiring," and it makes recruiting look so small scale (as in: why have companies been thinking so small all these years?) small.

"Acqhiring" is also damned expensive.

"Acqhiring" is the practice of acquiring a company solely for the talent involved. Never mind the product or intellectual property - the value of the organization is its brain power.

Of course, "acqhiring" is not really new. It's been happening for decades in some form or another. What is new is that several companies are wearing the practice on their sleeves. With the swelling rise of technology start-ups over the last decade - most of them still private and not held to the demands and scrutiny of shareholders the way public companies are - many companies aren't even trying to deny the true intent of their acquisitions.

Needless to say, acqhiring is most popular in the tech sector, where start-up founders and engineers are more valuable than the products they're developing. Facebook according to the article, has made 20 or so talent acquisitions in the last four years. Usually, once the companies are purchased, their products are dropped entirely.

The concept is intriguing but controversial, since the cost for talent acquisition rises exponentially under such deals. It is reported that FriendFeed was purchased by Facebook for $47 million, or approximately $4 million per employee. The product still exists, but has been largely neglected.

How much do you spend per employee on talent acquisition? How much are you willing to spend?

Frankly, it's hard to comprehend this fad gaining and maintaining ground. The stakes for the war for talent have evidently risen, at least in the technology sector, but as these companies evolve and mature (and go public) wild "acqhiring" is going to face increased scrutiny both internally and by stakeholders. Stakeholders don't want to see their ownership stake diluted, nor do they want to overpay for staff that has no assurance of sticking around.

Nevertheless, it's commendable that companies such as Facebook, Zynga and Google (three organizations mentioned in the New York Times article, though, notably, Google - the only public company of the group - downplayed its involvement in the practice) recognize the value the right talent brings to the table. It's hard to imagine an individual employee being worth millions of dollars to acquire - especially if there is no assurance he or she won't leave within a year or two - but these companies are thriving on the mindshare of their workforce.

Maybe "acqhiring" isn't as ambitious as it seems. Maybe, in select cases, it's essential.

Erik Samdahl
Erik is the head of marketing at i4cp, and has nearly 20 years in the market research and human capital research industry.