3 Ways Startups Can Survive and Thrive after Being Acquired

March 8, 2016 - 3 minutes read

Android app developer

For every startup iPhone or Android app developer that dreams of growing their company into the next Facebook or Instagram, there are dozens more with a more humble goal: acquisition by a larger company. Big exits are a major success for mobile app developers, but getting acquired doesn’t always translate to success for the company itself. While access to a bigger budget and more experienced team seems like a recipe for growth, the management transition can just as easily leave a once-innovative mobile app lost at sea, hemorrhaging users in favor of younger, more nimble startups.

Consider the email app Mailbox as an example. Remember Mailbox? (You’re not the only one wondering what happened.) Once the hottest app on the scene, Mailbox went up in smoke in a matter of years — in spite of a 100 million dollar acquisition by DropBox.

Having worked with startups that got acquired both as a top Los Angeles app development company and as core team members, we’ve been able to observe what can go right — and wrong — when a startup gets acquired.

In our experience, these are the top three actions young startups can take to prepare for a smooth acquisition:

1. Build your team with reorganization in mind

From “managing upwards” to navigating a vastly larger engineering department, core startup employees should ideally have experience working lower on the chain at larger tech companies before. If not, everyone needs to be prepared for changing the workflow power structure after being acquired.

2. Negotiate job titles as early as possible

Getting acquired is incredibly exciting for mobile app developers. After all, it represents an incredible windfall. Not everyone on the team is guaranteed to share the sentiment, however — especially if they don’t have a stake in the company outside a paycheck. Therefore, job titles need to be negotiated as early as possible to avoid disappointing your team if anyone has to drop the “senior” or “head” from their original job title.

3. Celebrate, but don’t rest easy

Losing the “fire” of a passionate, hard-working founder can be a death sentence for startups, even once acquired. There is a tendency to want to take a break and apply less manic energy to growing the product after acquisition.

If you need to recharge after an exit, experienced founders recommend taking a dedicated vacation. After that, be prepared to work just as hard to keep the product alive and growing under the new organization.

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