People are among the most prized assets of many startup companies, so when employees leave after an acquisition, it can be a substantial loss for the acquiring company. Why do so many startup employees leave, and how do startup acquisitions impact their careers? Using U.S. Census Bureau data from 1990 to 2011 that encompasses 230,000 acquired startup workers, the author researched these questions and discovered significantly higher turnover rates among acquired workers compared to regular hires. The author analyzes the causes for the disparity, examines prominent historical and recent examples of employee departure post-acquisition and what they did next, and suggests strategies to mitigate the loss of talent when companies are acquiring startups.
In the last two decades, the startup world has witnessed a steady climb in acquisitions. These acquisitions have emerged as the primary channel through which ventures successfully exit. It’s no surprise, given that acquisitions offer acquiring companies access to a new source of technological innovation, fresh talent, and increased market power. Among the most prized assets of many startup companies is their human capital, often serving as the driving force behind their innovation and success.