It's just an acquihire. On the startup's side, the company has failed and they would be shutting it down regardless; this way they've found jobs for their employees and saved face. On the acquirer's side, they've recruited a team that they think is worth hiring with a lower cost of sourcing them.

The acquirer usually isn't paying that much in a case like this. Unlike what some other comments in this thread say (I assume from people new to the industry), nobody's getting rich.