How do startup acquisitions work?

An acquisition — the most common startup exit by far — is the purchase of the company for cash, stock, or both. Proceeds flow through the liquidation waterfall: preferences first, then common; escrows and earnouts can hold back part of the price.

Strategic buyers pay for fit and synergy; outcomes range from returns-driving sales to soft landings barely covering preferences. Board approval, drag-along mechanics, and investor consents govern the process.