People-First Acquisition Screen
Screen acquisition targets for adaptable people before products or financial upside
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 6
- Confidence
- 94%
The People-First Acquisition Screen evaluates a target by beginning with the builders rather than ending with a conventional culture check. First, the buyer identifies whether the transaction accelerates an existing initiative or supplies a capability it has not figured out. It then assesses whether the target's leaders and team can work effectively within the buyer's portfolio, remain energized after the deal, and take on broader responsibilities over time. Subject-matter expertise matters, but adaptable judgment and cultural compatibility are treated as more durable assets. Post-acquisition roles should exploit the acquired team's strengths while offering meaningful new challenges. This mechanism protects against buying code or market access whose value disappears when key people leave, and it can create unexpected leadership capacity across the wider organization.
Origin
Kathleen Philips explained that Zillow reviewed roughly 125 potential deals in one year and began every acquisition assessment by examining the people behind the target.
Core principles
- 01Acquisitions transfer teams as well as assets
- 02Culture fit determines whether capabilities survive the deal
- 03Adaptability matters more than narrow subject expertise
- 04A target should accelerate a strategic priority or unlock an unsolved capability
- 05Retention begins with meaningful future work
How to run it
- 1
Define the acceleration goal
State which existing initiative the acquisition should accelerate or which unresolved capability it should add.
Pro tip Describe the desired outcome without naming a preferred target first.
Watch out A vague strategic rationale makes almost any attractive company appear suitable.
- 2
Map value to people
Identify which founders, leaders, operators, and specialists created the target's differentiated value and how dependent that value remains on them.
Pro tip Trace important product and operating capabilities to their actual owners.
Watch out Do not assume intellectual property can substitute for tacit team knowledge.
- 3
Test working compatibility
Assess whether the target's people share compatible standards, decision habits, and expectations about autonomy and accountability.
Pro tip Use substantive working sessions rather than relying only on executive interviews.
Watch out Surface-level friendliness is not evidence of culture fit.
- 4
Assess adaptability
Look for people capable of leading new products, brands, or functions after their original responsibilities change.
Pro tip Ask for examples of successful role changes and unfamiliar problems solved.
Watch out Overweighting narrow subject expertise can obscure stronger general operators.
- 5
Design meaningful roles
Give important acquired employees clear responsibilities that use their strengths and create room for continued growth.
Pro tip Connect retention incentives to credible work, authority, and purpose.
Watch out Financial retention alone may not overcome the psychology of joining a former competitor.
- 6
Make the people-adjusted decision
Discount the deal when critical people are unlikely to stay or thrive, even when the product and financial case look attractive.
Pro tip Model the target's value under realistic retention scenarios.
Watch out Do not treat people diligence as a formality completed after price agreement.
In the wild
Susan and Matt Daimler joined Zillow through its acquisition of Bifolio, a small co-shopping company. When StreetEasy needed new leadership, they moved from operating their original product to playing key roles in a much larger Zillow Group business.
→ The acquisition supplied adaptable leaders whose value extended beyond the product Zillow initially purchased.
Zillow later divested Diverse Solutions, but founder Justin LaJoy remained with the company and ran an entirely different product line. His continuing value was therefore not tied exclusively to the acquired asset.
→ Zillow retained useful leadership capability even after disposing of the original business.
Common mistakes
Buying the product but losing the builders
A product's apparent value can depend on tacit knowledge that disappears when its creators leave.
Equating culture fit with sameness
Compatibility should preserve productive differences rather than require the acquired team to resemble the buyer in every respect.
Offering money without meaningful work
Retention packages are weaker when employees cannot see an important role for themselves after closing.
Is it for you?
Best for
It is best for technology acquisitions where product knowledge, operating judgment, and adaptable talent drive most of the value.
Not ideal for
It is less useful for transactions whose value lies almost entirely in passive assets, contracts, or liquidation proceeds.
From the transcript
“but fundamental in every acquisition, what we start with is we look at the people and decide whether they are people who we could work…”
“ultimately we we are acquiring the people who have built these brilliant products and we want them to stay and we want them to be…”
“Subject matter expertise is important, but it's not the critical piece.”
From the episode
Zillow + Trulia (with Zillow Group CFO Kathleen Philips)
Kathleen Philips