Startup Acquisition Strategy: 28 Examples of Buying Companies Cheap

A startup acquisition is when one company buys another startup, either the whole company (through a stock purchase or a merger) or only its assets, to get its product, customers, team or technology. To acquire a startup, you decide what you want to buy, find a target, agree on price and terms in a letter of intent (LOI), check the business in due diligence, then sign a purchase agreement, close and integrate it.

Once an LOI is signed, closing typically takes 60 to 120 days, according to Startup Lawyer’s acquisition process guide. Below are the six steps, what five buyers told us they paid, how to structure and finance a deal, and what it costs after closing.

Key Takeaways

• Once a letter of intent is signed, a startup acquisition typically takes 60 to 120 days to close, according to Startup Lawyer’s 2026 process guide.
• Serial SaaS buyers we interviewed pay about 2x to 4x ARR in most deals (SaaS Group, August 2024) and 2x to 8x ARR across seven deals (itrinity, February 2025).
• 24% of private-company acquisitions outside life sciences included an earn-out in 2025, up from 19% in 2014, in SRS Acquiom’s 2026 data on the deals it serviced.
• Lemlist paid around €15 million at close for Claap, a seven-person startup at about $2M ARR, using cash, a vendor loan and convertible bonds, with up to 25 million in total if Claap reaches $10M ARR within three years (Lemlist CEO, October 2025).
• Curate paid $40,000 ($65,000 with legal fees) for a competitor with $120,000 of ARR, then spent an estimated $200,000 of developer and customer success time on the deal (Curate CEO, September 2022).

How to Acquire a Startup in 6 Steps

1. Decide what you’re buying. Write down the gap the deal fills: a product you’d otherwise build, customers who are expensive to win, a team you can’t hire, or a sales motion you don’t have. This thesis tells you which targets to look for and what to check later.
2. Find targets. Look in your own market first: competitors that keep showing up in your deals, tools your customers use alongside yours, and founders who contact you about selling. Then try marketplaces such as Acquire.com, business brokers and M&A advisers.
3. Approach the founder. Open with how the two companies would be stronger together, not with a price, and find out what the seller wants: a clean exit, a role, upside, or a good home for their customers.
4. Agree terms in a letter of intent. The LOI sets the price, how it’s paid (cash, deferred payments, earn-out, shares), whether you’re buying the company or its assets, and an exclusivity period. The price terms are usually non-binding; exclusivity and confidentiality can be binding.
5. Run due diligence. Check revenue quality (MRR, churn, net revenue retention), customer contracts, code and IP ownership, the cap table, employees, tax and privacy. Problems found here often change the price, the terms or the closing conditions, or end the deal.
6. Sign, close and integrate. Sign the purchase or merger agreement, pay at closing and announce the deal. Then move customers, keep the people you need and deliver the product plan that justified the price.

Cognism’s purchase of Kaspr shows these steps in practice. In September 2021 a Cognism salesperson noticed Kaspr, a French product-led data provider, showing up in their deals. Cognism’s net retention on those micro and SMB customers was around 60%, while Kaspr’s was 110% or more with the same kind of customers, CEO James Isilay told our Founder500 audience in September 2022 (watch at 8:20). He flew to Paris to pitch a combined company, agreed a letter of intent in November, ran financial and technical due diligence in January 2022 and completed the deal in March 2022. Kaspr had 14 people (watch at 13:09). Cognism paid in cash at milestones because a pure cash deal was more tax efficient in France (watch at 15:07).

Why Buy a Startup Instead of Building It

Buying is faster than building when the thing you need already exists and works. The buyers we interviewed bought for four reasons:

• A product: Lemlist bought Claap because, CEO Charles Tenot said, Claap had a strong product and tech team but lacked distribution, which Lemlist is good at (watch at 7:47).
• Customers: Curate bought a smaller competitor’s customers in 2020 and moved them onto its own product.
• A sales motion: Cognism had tried to build a product-led, self-serve motion in-house without success, so it bought Kaspr’s.
• A team: after its first deal, Curate CEO Ryan O’Neil said the next one would have to come with the team, because buying a product alone left all the migration work to his own people (see slide 9).

Build instead when the target is a near copy of your product with no team attached, when every customer would need a manual migration, or when the deal would pull your team away from a bigger priority. Curate’s acquisition delayed its own move to product-led growth, Ryan said.

How Much Does It Cost to Buy a Startup?

Small SaaS startups usually sell for a multiple of annual recurring revenue (ARR). The multiple rises with growth, retention, profit and how much the business matters to the buyer, and falls when the seller needs to exit quickly. Here is what five buyers told us they paid:

Buyer (source)	What they bought	Price	How it was paid
itrinity, Michal Aftanas (February 2025)	Seven SaaS products	2x to 8x ARR across all seven deals	All cash, no earn-outs: 80% at closing, the rest three to six months later (watch at 11:32)
SaaS Group, Tim Schumacher (August 2024)	About 20 SaaS companies	Usually 2x to 4x ARR; 8x to 9x only rarely	Cash, earn-outs or seller financing, depending on the deal (watch at 17:31)
Lemlist, Charles Tenot (October 2025)	Claap: seven people, about $2M ARR	Around €15 million at close, up to 25 million with the earn-out	Cash, a vendor loan, convertible bonds and an earn-out (watch at 10:14)
Curate, Ryan O’Neil (September 2022)	A competitor with $120,000 of ARR	$40,000 ($65,000 with legal fees)	A flat $40,000 with no earn-out, equity or buyouts (strictly an asset sale), closed in about three weeks (watch at 13:31)
Brad Miller (September 2022)	AwarenessTech, which he describes as a $5M SaaS company	About $6 million	About $5.5 million of equity from him and a partner, plus about $1 million of bank debt (watch at 3:41)

Tim Schumacher said SaaS Group’s rare 8x to 9x deal was for a very small company that was growing fast and mattered strategically (watch at 17:50). At the other end, Curate’s seller was motivated to get out quickly, so a flat offer worth about a third of ARR was enough. To test a price against your own numbers, try our revenue multiple calculator or SaaS valuation calculator.

How to Structure the Deal

Start with what you’re buying. In an asset purchase you choose which assets and liabilities you take on; in a stock purchase or merger you take the whole company, so its contracts stay in place but its history comes with it. Startup Lawyer’s guide points out that the structure changes taxes, consents and who carries which risks, so it can matter as much as the price.

Then decide how the price is paid. Most deals combine four building blocks:

• Cash at closing: the simplest option and the one sellers like best. itrinity pays 80% of the price at closing.
• Deferred payments or a vendor loan: the seller is paid over time, so you can pay from future cash flow. Tim Schumacher said seller financing saves SaaS Group interest, so it can pay a little more (watch at 17:03).
• An earn-out: part of the price is paid only if the business hits targets after closing, often revenue or ARR. SRS Acquiom found earn-outs in 24% of private-company deals outside life sciences in 2025, up from 19% in 2014. Tim said an earn-out shares the risk, so the buyer can pay more (watch at 16:43).
• Shares or convertible bonds: equity in your company, or bonds that convert into it, which keep the founders invested in the combined business.

Example: How Lemlist Paid for Claap

Lemlist bought Claap, a call intelligence startup with seven people and about $2M ARR, in October 2025. CEO Charles Tenot told Nathan Latka that Lemlist won against two other bidders, including a much bigger AI platform in France, even though it bid slightly less, because Claap preferred the fit with Lemlist’s product and team (watch at 9:45).

He put the price at 15 to 25 million, with around €15 million paid now and the rest depending on Claap’s growth. As a rough guide, he said, close to but not exactly the real amounts, that meant about 5 million in cash, about 5 million as a vendor loan and about 2 million in convertible bonds that convert into shares at a 20% to 30% discount if a liquidity event such as a sale or partial sale happens. The earn-out pays as Claap’s ARR grows, up to the full price at $10M ARR within three years.

It’s a vendor loan. So it’s basically like deferred cash… It’s a debt, but instead of getting the debt from a financial institution, you get the debt from the vendor.

Charles Tenot, CEO, Lemlist. Watch at 10:42

Watch the full interview below, or read our recap of the Lemlist and Claap deal.

How to Finance a Startup Acquisition

Small acquisitions are usually paid for from some mix of these:

• Profits and cash on hand: itrinity pays for each acquisition with free cash from the companies it already owns and has no debt (watch at 22:48).
• The seller’s money: a vendor loan or an earn-out reduces the cash you need at closing, as in the Claap deal.
• Debt: a bank loan or a credit line. SaaS Group draws on a line of credit from debt providers, and Brad Miller added about $1 million of bank debt to buy AwarenessTech.
• Equity: SaaS Group raised about $25 million in its first outside equity round, selling a single-digit percentage of the company (watch at 4:24).

Whatever the mix, line it up before you make an offer. Tim Schumacher paid for SaaS Group’s first two deals with his own cash:

It was always super important for us to have the financing lined up before the deal, because you don’t wanna have… the financing jeopardize a deal. It just makes you look like a fool.

Tim Schumacher, CEO, SaaS Group ($60M revenue). Watch at 2:45

What Happens After You Close

Integration is where the value of a deal shows up or leaks away. Curate’s acquisition is a useful lesson in both. Ryan O’Neil’s advice from it (see slide 5):

• Plan around the customer: build the timeline from the customer’s point of view (what changes, on what date, at what price), then plan the rest of the project around it.
• Keep pricing simple: Curate let acquired customers keep their old price for a year, then gave them 30% off the new price for a year, and the proration was too complicated for its support team (see slide 6). One clear price and date works better.
• Use webinars: for low-priced customers, big group webinars worked better than onboarding each account one by one.

About two years after the deal, the customers Curate bought had grown from $120,000 to $250,000 of ARR and had paid $309,744 in total, against $65,000 for the deal and an estimated $200,000 of developer and customer success time, according to his slides from September 2022.

…we’ve driven 309,000. Depending on your opinion on net present value, right, was it worth it? Yes. Would we do it again? No, right, like not in this particular situation.

Ryan O’Neil, CEO, Curate. Watch at 14:58

His reasons: Curate would never again need a quick win as badly as it did in 2020, the deal pulled the whole team away from company goals, and removing the third-place competitor left room for new ones (see slide 8).

Paying for Growth Without Selling Equity

Buying a company is one way to add revenue. Investing in your own product, team and marketing is the other, and both take cash.

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Startup Acquisition: FAQ

How do you acquire a startup?

Decide what you want to buy (a product, customers, a team or a sales motion), find a target, approach the founder, agree price and terms in a letter of intent, run due diligence, then sign the purchase agreement, close and integrate the business. Once the letter of intent is signed, closing typically takes 60 to 120 days.

How much does it cost to buy a startup?

Small SaaS startups usually sell for a multiple of annual recurring revenue, adjusted for growth, retention, profit and fit. Among the buyers we interviewed, SaaS Group said most of its deals are at 2x to 4x ARR, itrinity said its seven acquisitions ranged from 2x to 8x ARR, and Curate paid $40,000 for a competitor with $120,000 of ARR because the seller wanted a quick, clean exit.

How long does a startup acquisition take?

Usually a few months. Startup Lawyer’s 2026 guide puts the time from a signed letter of intent to closing at 60 to 120 days, longer if diligence turns up problems. Cognism took about six months from first noticing Kaspr in September 2021 to completing the deal in March 2022, while Curate closed a small asset deal in about three weeks.

How can you buy a startup without paying all cash upfront?

Combine cash at closing with deferred payments. A vendor loan (seller financing) lets you pay part of the price over time, an earn-out pays part only if the business hits agreed targets, and shares or convertible bonds in your company can replace some cash. Lemlist used all three when it bought Claap in 2025. Debt such as a bank loan or credit line can fund the rest.

What is an earn-out in an acquisition?

An earn-out is part of the purchase price that is paid only if the acquired business hits agreed targets after closing, often revenue or ARR milestones; Claap’s runs for three years. It lets a buyer pay more while sharing the risk with the seller. SRS Acquiom found earn-outs in 24% of private-company deals outside life sciences in 2025.

Is it better to buy a startup’s assets or its stock?

It depends on what you want to keep. An asset purchase lets you choose which assets and liabilities you take, which limits inherited risk but can mean moving contracts one by one. A stock purchase or merger takes the whole company, so contracts stay in place, but its past liabilities come with it. Taxes and consents differ too, so decide with a lawyer before you sign the letter of intent.

What happens to the founder after a startup is acquired?

It depends on the deal. Some founders hand over the keys and leave within weeks; others stay for years, often because part of their payment depends on it. Tim Schumacher of SaaS Group said he has seen both: deals where the founders were out in four weeks, and founders still with the company three years later. Lemlist structured the deal to keep Claap’s founders involved through convertible bonds and an earn-out.

Where can you find startups to buy?

Start with your own market: competitors that keep showing up in your deals, tools your customers use alongside yours, and founders who contact you about selling. Then look at marketplaces such as Acquire.com, business brokers and M&A advisers. Cognism found Kaspr when one of its salespeople noticed it appearing in their deals.