Discover the qualities and skills needed to succeed as an acquisition entrepreneur. Do you dream of scaling a business to new heights? What if you could skip the lengthy and complex startup phase and generate profitable revenue from day one? Acquisition entrepreneurship could offer you just that!

This blog post will tell you everything you need to know about acquiring a startup, along with handy tips to make your next acquisition a success.

What is acquisition entrepreneurship?

Acquisition entrepreneurship is a buy-and-build strategy that often offers a faster and easier path to entrepreneurial success. It involves buying, running, and scaling an existing company as a means of becoming an entrepreneur.

Suggested reading: Acquisition vs. Ideation: Is Acquisition Entrepreneurship Your Best Bet?

Why should I acquire a startup?

Did you know that 20% of businesses fail in their first year and around 60% won’t make it to three years? The sad truth is that the majority of startups fail for various reasons including cash flow problems and lack of market demand.

This is why more entrepreneurs are shifting away from the conventional startup route in favour of acquisition entrepreneurship.

An easier path to entrepreneurial success

One of the biggest advantages of acquiring a business is that you will skip the time-consuming, complex, and risky startup phase. Instead, you’ll take control of an established company and have the opportunity to hit the ground running and start making a profit from day one!

Of course, acquiring a startup is not without risk but your chances of success are much higher when compared to starting a company from scratch.

Benefits of acquisitions include:

• Fewer entry barriers

• Higher market power

• Established customer base

• Higher growth potential

• Access to valuable resources e.g. quality staff and capital

Suggested reading: The Acquisition Advantage

6 tips for acquiring a startup

If you’re ready to dive into the exciting world of entrepreneurial acquisition, here are some top tips to help you buy then build a profitable startup.

1. Reach out to other entrepreneurs for advice

Entrepreneurs who have been through the process can offer valuable guidance and support your acquisition journey. You can join a free platform like Foundy to connect with other entrepreneurs and industry experts.

2. Look for a company in a familiar industry

Acquiring a startup in a new industry is possible, but it can be extremely challenging and has higher risks involved. This is why it’s preferable to buy a company in an industry that you are familiar with.

3. Build an innovative company culture

As American entrepreneur Steve Bank once said: “Innovation in an existing company is not just the sum of great technology, key acquisitions, or smart people. Corporate innovation needs a culture that matches and supports it.” Focus on building a corporate culture that aligns with your vision and encourages innovation.

4. Assess business viability

The startup you acquire should ideally have been around for at least a couple of years. Check the viability of any company you’re interested in by carefully inspecting financial records and carrying out a thorough due diligence check.

TIP: You should also conduct research to measure public perception of the business such as using brand perception surveys and other tools.

5. Focus on startups with a loyal customer base

Acquiring a new customer can cost five times more than retaining an existing customer and increasing customer retention by 5% can boost profits by 25-95%. This is why it’s so important to acquire a startup with an established and loyal customer base.

TIP: The most valuable customers are those who keep engaging with the company, for instance, through a recurring subscription model.

6. Join an acquisition marketplace

Finding a suitable startup to acquire can be a difficult and drawn-out process. The good news is that you can leverage an acquisition marketplace like Foundy to make acquiring a startup quicker and easier. These platforms are also typically a lot cheaper than using a broker!

Find scalable, high-potential startups with Foundy!

If you want an easier and less risky route to successful entrepreneurship, join Foundy for free today. Our user-friendly marketplace will connect you with hundreds of sellers who are actively looking for an exit opportunity, and streamline your end to end process via an all-in-one portal, saving you valuable time and effort.

Foundy offers specialised M&A advisory services across a wide variety of industries. If you're in the process of growing your business towards a funding round or an acquisition, clients have repeatedly recommended utilising a portal. It starts with a free business valuation. This will help you and our M&A advisors understand your company's current position and the necessary steps to position yourself for a successful sale. Foundy factors in over 29 key elements that contribute to your business valuation, ensuring a comprehensive and accurate assessment.

Ready to discover your business's value?
Running a business and deciding to sell or acquire another can feel like having two full-time jobs. While some business owners thrive on the excitement of buying and selling on their own, many, including myself, benefit from collaborating with experts who bring more sector specific experience. However, it’s important to note that working with M&A advisors is not a one-size-fits-all solution. Hence why we built our advanced portal and Find An Advisor programme to empower you with the tools, education and relevant expert support to help you navigate the end-to-end process and secure a higher valuation.

Check out the free calculator on our pricing page, which shows you the six to seven figures in additional share value Foundy can provide your business.

No matter where you are on your business journey, Join Foundy for free today to access the resources needed for a smoother acquisition or sale process.