
Ask HN: How did your startup change after an exit? - after_the_exit
Hi HN<p>I&#x27;m an engineering VP in a (maybe) unicorn looking seriously at an exit and the vibe has ... already changed.<p>Looking at the current climate, I am probably going to be able to pay off my mortgage and send my partner to grad school, but financial independence or FYM isn&#x27;t on the cards. I like it here, and am not planning to move on yet.<p>I&#x27;ve been wondering where the stories about what happens (what goes wrong&#x2F;right) after an exit, like an IPO.<p>What should I be looking out for after the exit? Any experiences from senior engineering staff? Or even good blog posts or books?<p>Thanks
======
vechagup
People spent a lot less time working and a lot more time checking the stock
price and estimating their net worth. As the stock headed south, and the press
started writing mean articles about us, morale went south.

Lunchtime talk started to focus on money. Some people nursed unrealistic
fantasies about an upward turn in the stock. Those of us who were more cynical
sold our shares earlier and were happier in the long run. Eventually most of
us moved on to other companies. The company is headed down the drain, but many
of us are still friends. I bought a condo.

~~~
hinkley
I’m pretty sure that people who say things like, “if I’d have invested $10k in
Apple in 2008 I’d be a millionaire” are so far from right that they aren’t
even wrong.

Nobody holds on to a winning lottery ticket that long. You cannot exit at the
top and trying to do so will drive you crazy.

I think you and your friends were right. I had a coworker that was selling his
stock as fast as he could and it finally dawned on me that he was doing the
right thing. When you work at a place, you are investing your time an energy
into an idea. If you hold stock in that place, you aren’t diversified.

If the stock tanks, layoffs are more likely to happen. And then you are broke
and jobless. There are very few companies you can work for where your own
stock is the best bet on the stock market, and second best is often pretty
darn good. Gamble on a different income stream.

~~~
spurdoman77
There is no right or wrong, it also comes down to personal preferences. Many
seriously rich people probably havent been diversifying that much.

Also, a middle ground is possible. Sell some of the stock for safety, and take
risk with the rest.

~~~
throwaway_bad
Tech stocks outperformed market even when market was on a historical bull run.
This might not (and probably won't) hold true in the future but it does bias
all our current anecdotal samples.

I think the FAANG people I know who supposedly make 500k/yr only got to those
numbers by never selling a single share and then reporting total net worth
including appreciation divided by time worked. Their base salary isn't
actually that crazy. People who sell all their shares for index funds didn't
do as well.

~~~
SubuSS
I am guessing this isn't what you wanna hear but, They don't do a post hoc
calculation.

It is usually the salary + stock award that will vest over 4 years. For most
companies with a flat vest, the total will come to 500k/yr for certain levels.

The appreciation is all yours. Future perf bonuses which will be each 6 months
or a year are on top of this. Some companies do adjust for what you're making
in that year and cut down the perf bonus (In a previous company I once got a
promotion without any stock because our stock had tripled in the time...) -
but these companies have a serious growth outlook. Once the stock flattens,
there will be a major drain and they know this.

------
LanceH
Was part of a startup (250 employees) acquired by a huge company (300k+). The
megacorp had bought up about two dozen companies as they moved into this
market.

It reminded me a lot of how someone goes about restoring a car. You buy three
old cars. You restore one. The other two cars are parts cars for the first.

We were a parts car. We existed for a year as people were transferred to a
different are or left entirely. There was nothing left but maintenance work in
our group.

~~~
nsx147
This is a good analogy

~~~
LanceH
The analogy would be better if car enthusiasts would take the half restored
car, drive it in a ditch and leave it there.

------
nrp
One thing to look out for is that until you’re wholely absorbed in, expect
your parent company to offer high powered but disgruntled or burnt out
managers and individuals from elsewhere in the company positions in your
department. They’ll do this in an attempt to retain these folks by offering
them an interesting new challenge, but in the vast majority of cases, they’ll
spend a few months to a year half-heartedly trying you out and then leaving
anyway.

~~~
roguecoder
The only exception to this is if your company actually is a different
atmosphere from the parent company and the people coming in have some reason
they'd fit better there than in the rest of the company. I had good luck
collecting dissatisfied high performers from a parent company, but they always
went through an interview process, and I always started by having them take
two weeks of vacation and only then come back for on-boarding, as though they
were new hires I had just successfully poached.

------
jbmsf
We had a bizarre experience. Our acquisition was motivated by the value of our
contracts and came with a number of earn out goals to ensure that management
kept these going for a year. All of the money for the acquisition was held in
escrow for this time period, with payouts at the end of the year.

Our executive management was very savvy and negotiated that the acquiring
company couldn't interfere with our operations for the first year in any way
that could threaten our meeting the earn out goals.

The net effect was just weird. In many ways, nothing really changed for a
year. In other ways, everything kind of ground to a halt because there was no
motivation to do anything and no new management to steer.

I left at the end of the year.

~~~
bitcoinmoney
How much you got out of it?

~~~
jbmsf
Enough that I don't technically have to work, not so much that I won't keep
working.

------
jacquesm
It all depends on the acquiring party. Whatever you decide to do, do not put
too much stock into promises by management (either of the company being
acquired or the one doing the acquiring) about the situation post acquisition.
History has shown over and over again that those promises are worth absolutely
nothing.

~~~
PopeDotNinja
Also, don't put too much stock in stock if you don't get an immediate & liquid
payout. Stock you can't sell is worth exactly 'nil'.

~~~
harryh
If anyone has any post-exit but not yet liquid stock that they would like to
sell me for $0.01, my contact info is in my HN profile.

~~~
liara_k
> not yet liquid stock that they would like to sell me

That's... isn't that impossible by definition?

~~~
tekromancr
You can't transfer the stock, but you can sell a contract promising to sell at
a specific price once it's liquid.

~~~
Thorrez
Isn't that essentially shorting the stock?

~~~
lethologica
It’s a put option.

------
save_ferris
I don't have experience with an IPO, but I did work for a startup that was
acquired by a publicly traded Fortune 500 compnay. Short version is that it
wasn't a pleasant transition.

The startup had a niche product in higher ed and had done a really good job
cultivating their relationships with customers through top notch customer
support and rapid iteration on the engineering side. Typical startup
strategies for the most part.

Post-acquisition, the support team was essentially goaded into quitting by
management, only to realize that the product was far more sophisticated to
support than the other products in their portfolio, so they wound up having to
rebuild the support team. This was when we realized upper management was a
bunch of morons.

On the engineering side, they shifted our product development focus to making
the entire app a bunch of SPAs because reasons. The core engineering
leadership left, and the new hires that were brought in weren't as good.
Apathy set in, the company started stiffing us out of promised bonuses, and I
left.

What I imagine is true for both IPOs and acquisitions is that most publicly
traded companies usually care a whole lot more about the bottom line than
well-funded startups. Getting rid of the crazy retreats and in-house chef is
one thing, but when companies start getting squirrely about compensation, it's
a good time to think about what's next.

------
gwbas1c
I joined a startup 9 years ago that was bought and sold three times since I
joined. The first two sales were overall improvements. I didn't get rich, but
I got paid well for a job that I enjoy.

I won't comment on the current owner, because international politics forced
their hand more than the typical horror story. What I will say is that they
ran us very well for a long time.

All I can say is, if you like your job, like the product, and the pay is
enough, stay as long as you're happy. Always give new owners a chance to fix a
mistake.

A warning sign is when the parent company screws with your whatever you did to
be successful. This can be as mundane as moving from git to perforce; or
bypassing critical decision makers in your business critical processes. (IE,
you lose control of hiring or product management.)

So enter into the process with an open mind, and keep the payout as a buffer
in case you decide to give your two weeks notice and leave.

------
dundercoder
It was incredibly odd. They paid a good about for our company, then just
scuttled it. Didn’t use the source code, sold the hardware, neglected the
remaining employees until we left one by one.

They absorbed a few employees who are still there and are just as confused as
none of the tech they spent so much money on ever got used.

Maybe it was somehow a giant tax write off, or just buying out the
competition?

~~~
lightbendover
This same exact thing happened with my startup. I was surprisingly the second
engineer to trickle out, which is only surprising since I didn’t expect
someone to leave before me. The clash of cultures made it difficult to
integrate; different geographies, age brackets, experience, practices, tech
stacks, you name it.

Overall, I agree with the theories proposed in response to your post — either
incompetence of their leadership or favor to an investor. In our case, it was
a bit of both and the latter part was clear beforehand. Their crudely
constructed plan was to take our industry data to improve their models, but
they were not privy to any of it so effectively all they bought was a bunch of
tech they couldn’t manage to integrate since all of our tech leads left in the
first two months. That’s what they get for not providing an incentive to stay
at all, which again hints at both incompetence and a favor.

------
todaysAI
I got brought-out by an organisation who purchased me to fill a hole in their
main software product. Their plan was to take my 800 clients, deprecate my
software, and force everyone to move to their platform. Problem was a) my
clients liked my software, b) their platform was 3x more expensive, c) their
platform was a nightmare to configure.

I was tasked to sell their monstrosity and it was hell. To see the faces of my
clients as they looked at this 'new' platform was very demoralising for all
concerned. We ended up with about 20 clients who stayed and eventually the
organisation just got out of the industry segment all together, and they gave
me a redundancy package.

~~~
hinkley
This sort of situation is one it the pillars of my thinking that the sale is
and always has been about the founders getting rich, and everyone else gets a
pittance compared to what is asked of them.

But it sounds like sometimes the founder is fucked too.

They buy your product out from under you. They are never, ever going to be as
emotionally invested in it as you were. To you it was a pet, possibly even a
child. To them it’s just an asset.

How often has the product really gotten better after a purchase? Investment,
sure. Bank loan, all the time. But how often to mergers result in good news
for the customers? Maybe, possibly, if the products complement each other. But
even Bitbucket was better off before, from a customer standpoint.

~~~
todaysAI
That's right. They imposed their will on the customers and they responded.

It's always about the culture. They were just corporate.

------
superflit
I will tell my experience of being the guy who works for the company that
acquired others, AKA "the others" or "the enemy."

First, we are paired with the "legacy team" AKA --> You, in this case.

And mainly two things happen with the _" tribal minds"_ of the two companies
collide:

1\. My peers will feel that you are X or Y and will start to be condescending
with you and make your life harder;

2\. Your peers will feel that we are "cheap," "foreign," and ignorant labor
that will undo all the good work you did.

Because of my personal history, I can feel and see both side's views. And then
I like to work with Americans and Natives more than I like my culture.
(teamwork spirit is better)

Then I start to cut of the backstabbing and politics from my side, BUT I will
ask and audit if you are playing fairly with us and consider and talk about
the changes that will come and How can I make it easier for you[1].

If you don't play fair, I will have to enforce legal contracts and protect my
company from you. If my side is not being fair, I will ask to "rotate" the
team.

All the people who played fair were granted more work and more time and are
right now earning more money and happier on my company or another. And I still
really like them.

Conclusion: You got your badges, your war stories, and nice/elegant solutions.
It was fun, but the owners need money. Nothing personal You need more
challenges, and you Can Teach/Mentor better in other places. Thank you,
soldier. I do hope we keep in touch because I love the way you did your
terraform or scripts.

[1] - Telling management to keep you more time, more or fewer hours, Helping
you dealing with backstabbing, insulating you from things and doing referrals
for another jobs and whatever I can do.

------
bfung
Been through both IPO and acquisition, but not life changing money.

The IPO was a lot of fun. We were still in charge of our own company culture.
I wasn't privy to all the financial information, but we were told the company
was skirting profitability and it would've been just a small push to get
there. People worked harder afterwards to try to get to profitability. You
also realize stock price has nothing to do with your day-to-day work - it's
not in your control.

The acquisition was... well, a lot of us didn't stay. For one, a lot of
people's RSU's had already vested. The acquisition meant a company cultural
change. 1/3 of us left initially, some people were waiting for their RSU's to
vest. I think in all, 2.5 years after acquisition, only 1/3 of the original
staff is still there.

So depending on the exit, really understand what your yourself want out of
life and career. It's ok to be selfish in this scenario, as not everything
will be in your control, as others are also considering if they want to take
large sums of money, even if it's not FYM. For being higher up on the
corporate ladder, be honest and truthful to your reports. Don't make promises
you can't keep.

------
kenhwang
First time, we all got our options exercised immediately (worth pretty much
nothing for non-founders/investors) and retention+severance plan based on how
critical to company you were. Just about all the "strategic" execs bounced and
it had pretty much zero impact on the company. Most of the people responsible
for the company's success stuck around for several years after. The parent
company invested a lot into us, which lead to significant rapid expansion in
both staff and technical projects and investments which let to record company
financial growth and pretty much exceeded projections and expectations
constantly. At the same time, they let us be almost completely independent
since they didn't quite understand the formula to our success and didn't want
to mess with a good thing; we could use parent company resources whenever it
was beneficial or sensible, or not when it wasn't. Some of the things we used
to outsource got transferred to our parent company to do in-house (payroll,
legal, HR), some of their relevant business divisions got transferred under
our operational management. Our compensation and benefits were adjusted to be
more market competitive than startup pay. Morale was mostly good and most
people settled down, had kids, bought property or very expensive toys. Biggest
cultural change was that we had to actually do our job well and make money
instead of constantly throwing parties on VC money.

Then our parent company got acquired and by extension we did too. Not even a
remotely half-baked idea on what to do with us or our parent company.
Grandparent company started meddling immediately without remotely
understanding how the business functioned. Significant layoffs at both the
parent and grandparent company. Multi-year hiring, compensation, and promotion
freezes. Most of the founders were forced out. Forced down changes to core
business technology to match their technology. Not a thought given to employee
retention or business continuation. We pretty much had half the staff
voluntarily leave in the following half year, which might be more attrition
than the entire decade of company lifetime combined. Morale is pretty much in
the gutter and the bleedout doesn't seem to to be stopping anytime soon. We
pretty much flipped from a healthily profitable and growing division to one
that's on the verge of collapse overnight. Plus side is our parent company
negotiated an excellent severance clause for their employees, which lead to
borderline sabotage by people in the parent company in hopes of getting
severance instead of being forced to stay under the grandparent company.

Pretty much best case scenario and worst case scenario of what you'd want
after an exit.

------
uuilly
There are a lot of variables and these events don't happen that often so rules
are hard to come by. That said being, I've been through three acquisitions and
it really depends. How valuable are you personally to their strategy? If
you're not, you're likely not going to enjoy it. IE: if you're in accounting
and it was an engineering talent acquisition, then it's probably not good. If
you are valuable to their strategy, then expect things for you personally to
stay the same or improve. The big thing that happens is the company will
likely become unbundled and they'll take the parts they like.

My latest has substantially improved the company. We're still very
independent, employees made great money and now we have a strategic rudder and
a patient investor that we didn't have before. In this case, our tech is very
critical to their long term strategy.

------
speedplane
I went through an exit. There are a lot of ways it can go wrong, but if it
goes right, it can be good.

If the deal is structured in such a way that there is mutual incentive for the
company being acquired to continue growing, the results can be good. The
necessary ingredients are to incentivize the acquired company to grow and the
acquiring company to invest. If it's structured as a one-time cash-out for the
founders or a financial engineering acquisition for the acquirer, it's likely
a net negative.

Lets throw out some real numbers. Suppose "Small Startup" has $1M/year in
revenue, is breaking even as far as expenses/profit, and is growing 30%/year.

Bad Acquisition: Pay the Small Startup founders $3M for the company.

Good Acquisition: Pay the founders $2M, and promise them 30% of revenue above
$1M/year for the next 5 years. Also promise to invest an additional $3M over
the next 5 years.

------
wolco
If you are a vp it is very important to develop a relationship quickly after
merging because your position is usually the type that get absorbed.

Usually it's a process where the company tries to push what you have into an
existing product. The remaining staff support that product until the switch
over happens. Some are forced to stay with option vesting deals. But usually
happens over two years.

------
frenchie14
My company got acquired by a larger, public company. 80-90% of us are still
here after 3 years. Acquiring company was also a technology company, saw that
our product filled a gap that they needed, and believed that acquiring a
company was worthless if the people left. The worst thing that happened was
that after two years they took away our lunches (you think I'm kidding, but
all my lunch conversations are now dedicated meetings which is a massive drag
on productivity). I speak as an individual contributor, not a VP.

~~~
tenaciousDaniel
So during your lunch...you have a meeting? Every day?

~~~
splittingTimes
There is also the "lunch and learn" events. These things come when your
company does not want to be called out for their lip service that is "employee
training".

~~~
roel_v
Honest question: are there companies that do "employee training" in tech? What
does that look like?

~~~
Viliam1234
In my experience, there is never enough time to complete the existing projects
comfortably before the deadline. (If there is enough time, it means some team
member should be moved to another project, or a new project should be created.
Otherwise the managers are not doing their job.) So the actual problem with
employee training is usually time, not money.

If you could learn a new work-related skill in literally zero time, most
companies would be happy to pay the expenses. It wouldn't be different from
buying a new chair, or a larger monitor. But if learning the skill takes a few
days (forget about weeks!), in short term it means that a project that is
already late would become even more late. Which is why the company totes
supports investing in their human resources, but sorry, you can't get the
training right now, because there are higher priorities. (Spoiler: there will
always be higher priorities.)

Which is sad, because in many cases what is needed is time, not extra money.
There are free tutorials, free online courses; the employees have skills they
could teach their colleagues. In theory, the company totes supports employees
with initiative to offer internal trainings, until they realize that this
actually requires some time, too. Then you get the usual "yes, but not anytime
soon". (Translation: it means "no".)

I have also seen it from the other side. At some point of my life, I was
providing courses for companies.

Generally, there are companies willing to pay you for lessons of MS Word, or
MS Excel. (Also Photoshop etc., but I wasn't doing those.) But with anything
more complicated, time became an issue. Like, there would be a market for e.g.
Enterprise Java lessons, assuming you could teach the whole thing from scratch
in one day. Two days, maybe. But three days is definitely too long.

Literally, I once had a potential client asking me whether I could teach their
new employees, who had zero programming skills (in any programming language,
ever), make Java Enterprise applications. They gave me the checklist with
dozen required topics, like web services etc. How quickly can I get my
students from zero to expert? I thought about it, and concluded that perhaps
in one week, I could at least tell them something about each topic; with no
hope that they would remember it all, but perhaps if I also gave them detailed
written notes, they would be able to reconstruct parts of it later. When I
made a schedule and showed it to the potential client, they were horrified why
should it take so much time; there were expecting at most three days,
preferably two. At that moment I understood how much the complexity of
technical knowledge is underestimated by those who make the decisions.

tl;dr - you are supposed to learn in your free time (and sometimes the company
is willing to pay for it)

~~~
roel_v
Yeah that's my experience too, which is why I asked. As you say, sending a
secretary to an 'advanced Excel' course is common enough, but for real tech
topics, there isn't anything you can really teach in a few days that you can't
learn yourself from a book and some websites in the same time. And getting
some budget for going to a conference a few isn't usually too hard, but it's
still completely self-directed learning.

I'm not complaining, I was just wondering what is 'normal'.

------
splittingTimes
From my current experience, I closely monitor these things:

\- loss of agility in finance, HR, product development as you have to check
back with the corresponding divisions of the new parent company to get
aligment/green light for any kind of investment.

Worse: not being able to make independent strategic decision in these areas,
but only follow orders

\- restructuring of upper management that creates disquiet/uncertainty with in
teams -> productivity sinks

\- Parent company's sales force/marketing does not know how to integrate your
product into their current portfolio/process. (Example, when a manufacturing
company wants to "go digital", buys other company but their Sales has no idea
how to sale digital products)

\- focus shifts from "working on your product for your customers" to
"integrate with their system/ their other divisions" who have no idea of your
customer base.

\- corporate politics takes over the decision making process

\- general much more "process" creaping in, make you develop much slower. (but
that does not have to always be a bad thing)

------
brayhite
I imagine it widely varies depending on a multitude of factors; how many
employees are equitably compensated, whether it’s an acqui-hire or a
tech/business value acquisition, if the acquiring company/organization plans
to take over any leadership duties, etc etc.

Generally though, most of not all were just thankful to not have to depend on
VC. Revenue wasn’t high enough to keep the company afloat, and the value in us
was largely in our established brand within the market combined with a rather
active user base.

Fortunately, most everyone who was in the company pre-acquisition are still
around over a year and a half later.

------
cmrdporcupine
Rest and vest... rest and vest...

[https://www.youtube.com/watch?v=6BaoxI75TRs](https://www.youtube.com/watch?v=6BaoxI75TRs)

I couldn't watch that clip when it first came out. Too close to home.

~~~
countryqt30
He got a contract and nothing to do? Perfect, it's free money on the table and
he can also take another paid job at the same time! <3

~~~
tonyedgecombe
It’s soul destroying, I’ve worked on contracts where it took 3 weeks just to
get an account before I could start work. I hated it.

------
annoyingnoob
I worked at a startup that was acquired. No one was able to retire and almost
everyone continued working for the new company. We were put on a 3 year
retention bonus plan. We got more financial resources but never really got the
human resources we needed. Things were largely stable for the first year or
so, then we started getting more influence from the new management team -
things that were not productive. My job became exclusively about my daily turn
over of 'story points', didn't matter if I was doing something useful just
that I did something. By the third year the business had all but dried up and
we had no clear direction. When the bonuses stopped I left. From my
perspective, you need to make sure there is a valid business model and a clear
vision to continue to be successful. Everyone one new and old needs to share
the vision.

------
arikr
The book "before the exit" seems pretty relevant for your scenario

------
xenospn
Most people left within 2 years. Founders phoned it in immediately after the
acquisition. We were a small, nimble company and were acquired by a HUGE
corporation, which ran us to the ground.

------
semiotagonal
If the stock starts tanking after an IPO, and the company is in upheaval,
there might be blackout periods where you cannot sell your stock and can only
watch as the price plummets.

------
dingdongding
Our founding team left or were made to leave by the acquirer. For one year
everyone kind of relaxed because we all made money. After that our management
team left had no vision because they were bunch of execs hired recently. They
lacked innovation and kept beating around the bush and left in 2 years of the
acquisition. At this point most of old timers left the company because of lack
of innovation or anything to do. I becomes like a graveyard.

------
werber
Looking through the comments, has anyone has a mundane or positive experience?
Or is it always bad? Not anywhere near having this kind of problem, but
fascinated

~~~
tim58
I've been part of two buyouts, have joined recently bought out teams, a
recently IPOed team, and part of four teams looking for a buyer.

I'm talking for personal experience from someone mid-career that moves around
a lot in the industry.

The best buyout experiences are the slow embraces instead of a big bear hug. A
slow embrace allows both sides to grow while they learn how to support each
other. A big bear hug will suffocate the purchased company while all energy is
spent assimilating instead of helping customers.

~~~
werber
When you say slow embrace, do you mean the acquisition happened slowly and
with transparency or the acquirer handled it well? This is a problem I’d love
to have to deal with tbh

~~~
0xFACEFEED
Post-acquisition example: Acquirer has a VP that's pushing the deal. VP makes
promises to make the deal seem as attractive as possible (eg: X will improve
in Y time). New team is pressured to move quickly. New team uses the honeymoon
period to flex all of their political capital. Existing teams get frustrated
as their work is de-prioritized/marginalized. Culture clashes happen if new
team isn't silo'd from existing teams. And so on...

------
pl0x
The last company I was at had an exit and it was great for the company's
growth. There were some culture changes but for the better.

@after_the_exit can you give us a hint of this unicorn so we have more
context?

------
verdverm
Depends on the exit, I watched an amazing culture be crushed after an
acquisition. So sad

------
DrAwdeOccarim
I joined a biotech as employee ~70, and after 5 years of growth (up to ~800
people) we went public. Nothing really changed. It's interesting how the large
amount of private capital has removed the need to go public very early on in
the life-cycle of a biotech. The biggest difference is that people spend more
time worrying about the stock price, but there are a number of catalytic
events in our future that everyone is kind of holding their breath for so it's
still kind of funny money. Compared to a tech start-up, where growth is
smoother (i.e., number of active users going up), biotech lurches/jerks
forward after key clinical events. Be it actual data or governmental decisions
on the data. The other thing that changed was the incorporate of more rigid
corporate practices like HR stuff. Everything got more serious.

------
theaccordance
It’s been 18 months since my company (non-founding engineer) was acquired, and
in that time I’ve watched the majority of the team I spent the last 5 years
around depart. I was engineer #10, and today only 2 of that original 10 remain
(besides myself).

Of the team we had at the time of being acquired, 2/3 have left. Some of those
departures were voluntary, others because their roles were eliminated
(replaced with different skill sets).

The monolith we built over 6 years continues to live, but its days are
numbered, as we’re shifting new development off of the project in favor of an
updated stack.

The P/E firm that acquired us implemented a different type of equity system
going forward: much like death, you can’t take it with you if you leave before
the next exit.

------
kuiro5
I found this article valuable when going through an acquisition:

[https://www.saastr.com/if-youre-acquired-you-need-to-
learn-t...](https://www.saastr.com/if-youre-acquired-you-need-to-learn-to-
move-from-persuasion-to-alignment/)

------
cleandreams
I didn't get life changing money but got good money. I like the new position,
I've had some amazing opportunities. But it's high stress. The market segment
is hot and the buyer is betting on us. It's great in the way a huge messy
challenge is great. It's hard problems. For me, I got stock buyout from sale
and on hire stock grant that I have to stay for some years to earn out. I plan
to stay. Altogether maybe 700K. Maybe more. Not sure. I feel pretty good but
it's intense. For our size startup it's hard to imagine how it could be better
than this. Nothing is easy.

------
yibg
I was an engineering director at a company that went public. It was a moderate
IPO, nothing special either way.

Maybe because of that not much changed afterwards. There were a bit more
compliance issues to deal with. We got a bit more money to spend. Recruiting
became both a bit easier (known value of offer) and a bit harder (can’t sell
the IPO dream anymore).

After IPO my total comp became about where it would be if I joined a large
public company to begin with, so nothing especially good or bad there either.

So I guess for me all in all not much changed, just something became more
explicit and known.

------
todsac
$100M to $1B+: Non-obvious Lessons Learned Selling to Yahoo! -
[https://link.medium.com/ru5Ku7a8J0](https://link.medium.com/ru5Ku7a8J0)

------
empath75
Be ready for non stop politics and a survivor like atmosphere. The first thing
that happens after a merger is they look for people they can fire to save
money.

~~~
Clubber
Those are called "synergies."

------
BinaryIdiot
I would imagine an IPO is a lot different than another type of exit, like an
acquisition. I've been through two acquisitions and both went terribly for
just about everyone but the founders.

For an IPO I haven't been through one of those but all of my friends just
basically stare at the stock price all day every day and brag to their friends
about how much money their stocks are worth.

~~~
hinkley
One acquisition in particular really gave me the vibe that I’d been sold like
cattle. From what I hear that is frequently enough exactly what has happened.

Founders sometimes have part of their pay structure tied up in retention
numbers. They have an incentive to stretch the truth until those milestones
are met.

The first time I was in a sale, a bunch of us had options that were worth
$40k+ On paper, which isn’t amazing but for your first one out it’s pretty
cool. But they couldn’t take in our culture like they said they wanted to, so
it started to unravel almost immediately.

What I found out later is that there’s a kind of merger where the buyer swaps
stock for your liquid assets. The founder got payed less cash than the company
had in cash and accounts receivable. All that money went into payroll as the
combined company cratered in slow motion. Ten months later our options were
underwater, and all of that imaginary money we were going to get was lost.

By the time I had another set of options worth anything, it didn’t take much
for a coworker to talk me into selling them the moment I could. Bought my
first MacBook for starters, and started a love affair with a bag company.
Ultimately I made more money off of the annual bonus than the stock, and got
out three weeks after the bonus was paid. I put part of that money into Apple
stock, which quintupled within the next couple years. And I’m still not rich.

------
cleansy
I joined a startup that was acquired by a large company. Once the original
founders left it went straight to hell. Upper management changed three times,
then we got merged with other acquisitions, layoffs followed. It went from
engaged, smart staff working long hours to unmotivated 9-5 cover-your-ass
corporate environment within one year.

------
ChuckMcM
It is always an interesting time. You didn't say "what kind" of exit, that is
important.

In one, people go from owning options in their company which is private to
owning options in another company that is also private. In the two companies
where I have seen that happen things didn't change a whole lot but the "new
way to do things" which is to say the way the acquiring company did things was
sufficiently different than the way the acquired company did that there was
churn.

In one the "exit" is really sort of an aquihire with no value transferred,
rather the employees are all given some form of retention package depending on
their perceived necessity to the success of merging in the acquired company.
In those, people are typically both happy to still be working and conflicted
because they now feel "trapped" as the only way to get value out of their
previous investment of time into the startup is by working through their
retention.

The rare, but happier version, is the one where stock options become
"tradable" at some future date for non-zero amounts of money depending on the
current stock price of either the acquiring (and already public) company, or
the rarest where the company itself goes public.

A lot here varies by scale. At Sun I watched[1] a number of people become
"overnight" multi-millionaires. Some people it didn't change at all, others
became insufferable prima donas, and a number basically scaled back their work
while they 'rested and vested.' A number of folks left to start their own
companies (some as groups like Legato) now that they had enough money to self
fund. Some, like John Gilmore, went off to do advocacy because of all the
crazy stuff going on in the Crypto wars.

Bottom line is that if its a big uptick in wealth for a number of people they
will all respond a bit differently. Life will be different.

For me, I came to recognize that there are many levels of "wealth"

Perhaps the first is when you have enough extra to insure your kids can go to
the college of their choice (within reason I suppose). This can empower one to
take some riskier bets and reap potentially some bigger rewards.

The next is when you have enough to send your kids to college and you can pay
off your mortgage so that your "burn rate" is manageable regardless of your
salary. This often empowers people to speak 'truth to power' since they don't
really care if their truth makes those in power so uncomfortable they are
asked to leave.

The third is when you own your living space outright, your kid's college is
taken care of, and you have diversified the surplus into an investment
strategy that is kicking off enough returns to cover your nominal burn rate
(taxes, insurance, food, gas, car maintenance, home maintenance, etc). I used
to talk about as being 'raman rich' much like a startup talks about being
'raman profitable' meaning that you don't _have_ to work but not working means
you might not get to take vacations or invest in other interesting endeavors.

So how your life changes will be based on both how you respond and how those
around you respond to the way you respond :-).

In the first decade of the 2000's one of those Sun people who had turned into
an insufferable prima dona came by looking for a job. They had mistaken (or
over estimated) how much of their new wealth was because of what _they_ did
and how much of it was just luck. As a result they embarked on a number of
risky startup ideas and I suspect never took anyone's advice on solving the
hard problems. As a result, a string of failed startups and a trail of people
who would listen to their pitch, nod politely and decline to participate. They
ended up selling their house, moving to the midwest near their ex-wife's
parents so that they could visit with their kids. Not a happy story.

[1] Not me though since I had started on the Monday _after_ they went public.

~~~
com
Love the term “ramen rich”. Sums it up well, happened to me.

~~~
askafriend
How is the experience of being "ramen rich"? Care to expand how it changes
your day to day work or relationship with work?

~~~
deanmoriarty
I would identify myself as “ramen rich“. Specifically, my post-tax living
expenses (rent, food, gas, entertainment, ...) are ~30X my liquid portfolio,
all invested in a bunch of diversified index funds that throw
dividends/interest income, as well as increasing their NAV.

It improved my life in the sense that I don’t feel the pressure of having to
keep a job I don’t like: I can quit and not work for several months and
nothing will happen. Even if I don’t actually quit, just the thought of me
being able to do it gives me a lot of comfort. I suffered significantly from
this in the past, where I was stuck in non-ideal work situations for
financial/immigration reasons.

But it’s far from being truly liberating: I constantly think that a
significant drop in the market could jeopardize my position (and I can’t move
more than 30% to fixed income investments, since I am young enough that
inflation is otherwise going to eat all my capital away), or a crazy medical
emergency force me to go bankrupt (and I say this as I have a pretty good
health insurance plan covered by my employer).

And, I think it would be nice to have more money for discretionary (e.g. more
traveling) or unforeseen expenses.

~~~
sokoloff
The source of the 3.5-4% “safe withdrawal rate” theory suggests that that is
designed with historical market declines in mind, so you might be better
immunized against that than you think.

Side note: You have the ratio inverted and probably should be thinking of the
portfolio income as pre-tax.

~~~
deanmoriarty
I am familiar with the Trinity study. Even if that is going to be true going
forward (which I am very skeptical, as I think global warming is going to have
a major impact on market returns over the next few decades), I am young enough
(32) that I really can’t trust these level of frugal expenses to be maintained
for the rest of my life.

------
matchagaucho
Imposter Syndrome is a phenomenon I've observed post-exit. With sudden success
some people believe they'll be exposed as a "fraud", despite evidence of their
competence.

The longer the vesting period, the more they have to lose with each decision.
So they simply stop taking risks.

------
bmurray7jhu
An exit is not always bad. Big companies have vast resources and established
sales channels. Acquired companies can offload peripheral corporate
functionality to their new parent and focus their efforts on core competencies
such as research and development.

------
cdeutsch
Be ready for a career change.

Within 2 years, the vast majority of the ~300 person startup I worked for had
found new jobs, and if they are still there they're likely not in the same
role.

------
zaphirplane
Out of curiosity, How much dollars worth of stock do people vp/manager/ic in
those situations get? I know it depends on the worth of the company, say <
unicorn more than a couple of hundred million

------
anonymous201910
I sold my bootstrapped company last year.

We had new branding in the works, new products and a recruitment initiative
that had been key to finding us very capable & motivated staff. I asked
several times during the due diligence if they actually wanted all of that to
continue, as they seemed a more conservative kind of shop.

Yes yes, business as usual please, came the response, who knows where it could
lead. They still insisted on an earn-out clause that hinged on profitability
alone.

After we signed, my whole experience of the (public) parent company was about
quarter-to-quarter profitability - there was no visible technical leadership,
everyone was fighting their own fires, just generally scrambling around hoping
to save money or land a sale. If anything got delivered it seemed to be down
to heroism, bullying or both.

After several weeks failing to meet up with other leaders in the company, I
concluded that they didn't want any of my company's current developments. I
emailed the CEO to say that I'd be firing about 50% of the team to save a huge
number on the salary bill, and best meet the earn-out criteria, i.e. that we'd
just be a cash cow and nothing more. I'd manage the transition, take the
personal flak for it, and get a bonus on my way out.

These were people I liked, most lived locally and many I'd personally
recruited. But I wasn't going to be naive about what the new parent company
would want.

Immediately - a call from their CFO, pearls a-clutched. He was shocked,
SHOCKED by my idea and emphasised it was not how things were done at the
parent company. Despite the clause promising no interference in my running of
the company, he was ready to veto me from doing it, with an EGM and
everything. He offered to settle the earn-out early if I left early. And that
was fine by me.

Two months later, they _did_ fire everyone I'd suggested, saving 2-4x what
they might have paid me.

My old company is now a landing page for a vaporware product based on tech
they have no expertise in.

There's not even any staff left who could debug the old platform if it broke -
so they're crossing their fingers that 1/3 of the revenue doesn't disappear
with a novel systems failure.

From the people who left, it sounds like a depressing, ambitionless place to
work - i.e. perfectly integrated into the parent company.

Any change of control is an opportunity for some types of people, and a death
knell for others, so I'm sure it's a better company for some people. Just
nobody I'd respect :)

------
kingofpee
That's the kind of posts they should show students at business school

So valuable comments it's insane

------
xapata
If you're acquired it depends on how the integration works. Sometimes it turns
out that they can't make the incentives align.

------
EnderMB
I worked for a legal startup as the lead dev. When written like this is sounds
cool, but in reality I was a fresh dev out of university thrust into a top job
with no idea what to do, and with a similarly skilled team we bullshitted our
way towards a product that got acquired by a large multinational company
(again, non-tech). It wasn't a huge acquisition, but enough to make the
directors rich.

I left just after the acquisition went through, because I wanted to work for a
company where I could be mentored instead of swimming on my own, but I'm still
friends with a lot of the people I worked with, so most of this is from an
outsider looking in, but with stories from those still in the company.

The parent company swallowed the whole company, and while the product was
still under the original startup name, it was built with the whole parent
companies resources. While the product sadly no longer exists, they invested
heavily in making sure it was a top resource, and fed into their main
business.

Culturally, the place changed considerably. They went from penny pinching to
giving generous budgets and perks to their employees. They were still to date
the only company I've known that gave software engineers full flexitime -
allowing people to work extra hours to build up extra holiday, and allowing
people to take holiday whenever they wanted, with a day of notice. It all
sounded amazing, but the biggest problems many of their faced was that the dev
team didn't really improve. The company itself didn't have any other
developers, so the same group of recent grads worked together for years.
They've all left the team now, but many of them spent years working on a
product without any other input. In this time, I had worked at three different
companies with dozens of other talented developers, and I had learned a ton
from them. Would you trade in mentorship and peer learning over insane company
perks?

The last one is a negative one. The startup had several "divisions", and while
the product is what got us acquired, the main money-bringer for several months
was a call centre used to cold-call companies to pass on leads. They also
dabbled in PPI, and other schemes from that time. We all knew that it was the
product we had built that the company had wanted, and although everyone had
been given new contracts at our new parent company, it became pretty clear
that it was "only" the product. After a year, the owner had left the parent
company to start a new venture, and mere weeks later everyone outside of the
core product team that hadn't moved into other roles were made redundant. Our
core product team consisted of about 8 people, in a company of around 50. A
year after the acquisition was complete, only around a dozen remained.

------
elmar
Probably, almost every dollar you receive from IPO will go into paying taxes.

------
oezi
The things I would look out for:

\- First, you need to find out if your department is not going to be axed
immediately. A lot of functions will become redundant depending on your size
(sales, HR, finance, IT are the most likely to go).

\- Next, you need to find out what the org structure of the acquiring company
is and how you integrate there. Each function that the acquiring company has
will be replicated on your site in many cases. One example: You currently
might not have a separation of product owners and project managers. If your
acquirer sees these roles as different, then you will have to follow suit and
people need to pick sides. Another example: If you have a regulatory
department that currently reports to you as VP engineering, but the acquiring
company has regulatory report into the GM/CEO whatever, then you will lose
this team.

\- If you can negotiate part of the post-acquisition plan, please make sure
that the acquiring party agrees to grow you / your site at least to double the
size. This means budget and head count (easy to forget the latter) must be
allocated for the next 5 years. Otherwise you will not likely be able to hire
anybody over the next 2 years, because you are not aligned to the budgetting
season and head count is frozen. You need the growth just to handle all the
new communication overhead you have with the acquirer.

\- Resist the temptation to realign salaries and job grades too fast to the
acquiring party. I have been in an acquisition where this was not handeled
well. You can end up with overpayed employees who were just in the start-up
for a long time and underpaid new hires. This can seriously mess things up and
cause conflict among employees. Take your time and align with the new
organization when everybody understands their new roles.

\- Don't expect founders to stick around. They were used to running the ship
and getting told what to do rarely works out unless for the vesting.

\- Distance yourself quickly emotionally from "your" start-up. The likelyhood
is large that the acquisition will break everything even though everyone has
best intentions (compare most comments here). Don't be sad if it does.

\- If you are an engineering VP now, you will likely end up as a senior
manager or director. Put all your effort into being put into a director grade.
Even if this is not justified normally (you need a team of 30-100 reports
and/or 30-100m in sales normally to be called a director), it is much better
to negotiate higher positions at the start. As many acquisitions are not
allowed to scale, it might be very tough to ever be promoted for the next 5
years otherwise.

\- If you can fight it, make sure that you retain on-site IT people. Corporate
function are usually hell, but corporate IT is the worst.

------
yebok2002
nice. i think it very good idea

------
bitcoinmoney
Why do you have to pay for your partner’s grad school? Isn’t there NsF
scholarship? And it it’s not STEM what’s the point of a 200k grad school when
you earn 50k/year after?

~~~
sokoloff
Business, law, and medicine are possible examples of not general grant funded
but still possibly good financial prospects.

