Company

How to Get Your Startup Acquired

October 20, 2021

There are several compelling reasons to enter a new market, including a desire to become your boss, a drive to make a difference, a love for your service or product, or maybe a willingness to earn more income. The following are required for a successful startup:

A robust sales and marketing strategy; high-quality accountancy; a strong legal team; a successful company structure; a devoted management team; healthy economic ability or a sound plan to acquire them; and guaranteeing that the industry’s best standards are followed. Regardless of why you want to start your own business, a startup takes a lot of elements to come together; therefore, the chances of it succeeding are still slim. 

Many entrepreneurs are content with their startup being purchased (i.e., taken over) by a more prominent firm so that they may sell it for a respectable profit. In reality, American firms are big acquirers of startups on the worldwide market, and they spend more per transaction than European companies. With deciding to let a larger business purchase your startup, there are many things to consider, just as there are before other sellers and buyers transactions.

Potential Buyers

Potential buyers are likely someone who has already purchased something from your startup. They have a vested interest in the product and would love to own it instead of being able to use it for free anymore.

Venture Capitalists

When you’re pitching to VCs, they must understand the value of your product. It doesn’t matter how big or small your company is; if a venture capitalist can’t see why there would be interest in purchasing your startup, then it’s unlikely they’ll invest money into growing your business.

In some cases, venture capitalists will invest in your product and acquire it for their portfolio. This isn’t a common practice with seed-stage companies (startups that haven’t raised money before). Still, we see it happen more often at later-stage financing rounds – or when the startup has already had success on its own and needs additional funding to scale up operations.

Venture capital firms like these because they typically get a return on investment faster than other funds by reselling acquired businesses within three years. If you think this might be an option for your business, then make sure you communicate with potential investors about how much traction you’ve gained since starting as well as any growth projections moving forward so they can better value your company.

A Competitor

This company may be in the same market as you, but not necessarily in your space. Acquiring them will make sense because it adds size to your business and gives you access to their customer base or distribution channels.

Strategic Buy

When a larger company already established in the market buys out your startup, it’s referred to as a “strategic buy.” This can be an advantageous option for startup founders because of how many resources they have access to through their acquisition.

Intellectual Property

Most startups have a business model that is built around some intellectual property. Most startup founders believe their IP to be the company’s most valuable asset, and it often turns out to be right! For an acquisition deal to occur, either you or your investors will need to own all the rights of ownership over your IP. If someone else owns these rights, they could make things difficult, if not impossible, for any potential acquirer.

Now What?

We’ve highlighted the following purchasers who could be interested in acquiring your company, as well as their possible motivations for doing so, which would be the easy part. The next stage is to figure out how to make your business more visible and appealing to potential buyers. The following is a list of everything you’ll need to complete this task:

A Solid Vision

If you have a clear vision of how your company or product can change the world, it will be easier to pitch it as an acquisition prospect.

An Attractive Product

A startup with a product continuously being updated and improved upon will have the edge over the competitors. A great idea can help you attract investors, but it’s how well your team executes that idea that determines whether or not they’ll be acquired.

Proprietary Technology

Developing your technology is very important for any startup. If you have a proprietary solution to an existing problem, this will increase your company’s value and make it more attractive to potential buyers.

A Good Story

Your business is a story, and every good story has an enticing beginning. The best stories have a narrative arc that engages the customer from start to finish, so if you want your startup acquired early on in its life cycle, potential investors need to see this as well.

Joint Value

To get your startup acquired, you need to understand the last stage before an acquisition occurs. This is called joint value creation (JVC). JVC happens when both parties in the negotiation can achieve what they want through this agreement. It’s about creating more value than each party would have on its own.

Posted in Startup News
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x