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Highlights
- “Acqui-hiring,” historically a transaction whereby a buyer agrees to acquire a target’s assets and hire its employees, has morphed from salvaging failed startups into a structure used by global technology companies for multibillion-dollar deals.
- The use of this arrangement has accelerated with the rapid dealmaking for artificial intelligence (AI) companies and, unsurprisingly, has drawn the attention of US antitrust enforcers and members of Congress.
- In its newer format, the acqui-hiring structure generally involves no formal acquisition or merger at all. Rather, the acquirer hires away a startup’s core team and enters into a non-exclusive license for the technology still owned by what is effectively a shell company.
- Regulators and lawmakers are concerned that these transactions snuff out emerging competition, consolidate already tight labor markets, and elude antitrust review.
- Companies pursuing such transactions will need to keep a close eye on developments in this area.
Principles of US merger control
The Clayton Act prohibits the acquisition of “any part of the stock or share capital” or “any part of the assets” of a company if “the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly”1.
For more than 100 years, this legislation has served as the foundation of the US government’s ability to regulate anticompetitive mergers and acquisitions. Additionally, since 1976, the Hart-Scott-Rodino (HSR) Act has afforded US regulators the ability to review significant corporate combinations before they are consummated and the tools to block proposed transactions that would run afoul of the Clayton Act2. Today, the Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) review most M&A deals valued at more than US$133.9 million3.
The acqui-hiring trend
The archetypal “trusts” that arose from the industrial revolution were capital-intensive corporations in heavy industries such as steel, oil, and railroads. US antitrust laws were designed to combat the harmful economic impacts of those companies, and the Clayton Act in particular is intended to prevent the anticompetitive effects of consolidation through corporate acquisitions.
In the 21st century, the business model of “Big Tech” is markedly different, largely relying on specialized laborers and the fruits of their efforts in the form of software and other intellectual property (IP). Recent developments with AI perpetuate the need for highly skilled employees and access to proprietary IP. In this context, acquisitions of “share capital” and “assets” addressed by the Clayton and HSR Acts are less prevalent, and the acqui-hire transaction structure is flourishing in today’s environment.
An acqui-hire is a transaction in which a company acquires a startup primarily to attract its key employees and absorb key IP rather than its products or revenue stream. As it has evolved, an acqui-hire is not even an M&A transaction in the traditional sense. Instead, an acquirer hires away a target’s founding team, and licenses its technology without formally purchasing the target entity or its assets.
Regulators are on the prowl
Earlier this year, FTC Chairman Andrew Ferguson was quoted as saying that acqui-hiring “has become a big enough deal” that the agency is “beginning to look very closely at how these things work, including determining whether we need to promulgate additional guidance here in the coming months”4. FTC Commissioner Mark Meador also expressed concern that “firms may acquire talent not to utilize it productively but to preempt rivals from accessing it.” In other words: buy and kill, but for ultra-skilled labor”5. Acting head of DOJ’s Antitrust Division, Omar Assefi, has identified acqui-hires as a “red flag”6.
The primary substantive harm identified by antitrust regulators is the elimination of nascent or potential competitors before they can mature into meaningful market participants. Startups left behind after acqui-hires are often hollowed-out entities lacking the personnel, leadership, and intellectual capital to compete.
Moreover, these arrangements often evade the pre-closing review established by the HSR Act. In February 2026, several US Senators articulated this point in a letter to the FTC and DOJ: “These transactions function as de facto mergers, allowing the companies to consolidate talent, information, and resources, all while apparently attempting to bypass the scrutiny typically applied to mergers and acquisitions”7.
Non-US acquirers face a distinctive challenge because acqui-hire scrutiny is intensifying across multiple jurisdictions. For example, the European Commission is encouraging its member states to refer for review acqui-hire deals that otherwise fall outside reportability thresholds8. And, although Canada’s Competition Bureau has not specifically addressed acqui-hires, the Competition Act’s legal framework allows it to review such transactions through formal acquisition, and in the right circumstances, talent absorption.
Conclusion
Antitrust regulators and legislators are attuned to the growth and evolution of acqui-hiring and the impacts they may have on competition in technology and AI markets. Companies with active or planned AI investment strategies should monitor developments closely and consider advocating for clear, predictable rules that distinguish pro-competitive talent mobility from anticompetitive consolidation.
Footnotes
1 15 U.S.C. § 18.
2 15 U.S.C. § 18a.
3 See id. §18a(a)(2)(B)(i). Monetary thresholds set by the HSR Act are adjusted annually based on US gross national product. The Act’s US$50 million “size of transaction” threshold was adjusted to US$133.9 million as of February 17, 2026.
4 Bloomberg Podcasts, FTC Will Review Acquihires Says Chair Ferguson, YouTube (January 16, 2026), https://www.youtube.com/watch?v=B81Z_-ePklY.
5 https://www.ftc.gov/system/files/ftc_gov/pdf/meador-concurrences-keynote.pdf.
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