Acquisition
Definition
Acquisition: An acquisition occurs when one company purchases another, either for cash, stock, or a combination. For startups, being acquired is a common exit path, providing liquidity for shareholders. Acquisition terms determine how proceeds are distributed among shareholders.
Example Usage
“We were acquired for $100M in cash, with additional earnout based on hitting integration milestones.”
Common Misconceptions
Related Terms
Exit
An exit is an event that allows startup investors and shareholders to convert their equity into cash. Common exits include acquisition by another comp...
Due Diligence
Due diligence is the investigation process investors conduct before finalizing an investment. It typically covers financials, legal matters, technolog...
Earnout
An earnout is a portion of an acquisition price paid contingent on the acquired company hitting future performance targets. Earnouts bridge valuation...
Liquidation Preference
Liquidation preference determines how proceeds are distributed when a company is sold or liquidated. Investors with liquidation preference get paid be...
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