
Ask HN: The startup I work for, got acquired. What will I get? - hemezh
I work for a real estate startup which got acquired recently. I am a developer and employee #1.<p>Suppose I have 1% equity vested over 4 years with 1 year cliff, what will happen to my stocks?<p>The company started in June 13, so none of my stock options are vested yet. I have read about single trigger and double trigger but couldn&#x27;t fully understand it.<p>Its a cash-stock deal. Do I get any cash out of this aquisition?
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PaulRobinson
You are going to need to read your paperwork, nobody here can advise you on
what is actually going to happen.

On all my share option deals I specifically ask for an instant vesting on a
sale/listing event (i.e. we get acquired or we make IPO, I don't need to wait
any longer), and when requesting it I normally get asked for an agreement to
do a work-in on acquisition - it means the acquiring company is not obliged
to, but may, have me work on their team for a year or two post-acquisition so
the stuff inside my head doesn't walk on me becoming rich overnight.

However, this is not standard to my knowledge. I have always had to ask for
it. Did you? Maybe it was put in place by your employer, maybe it wasn't.

So, read your paperwork, ask your boss, go and seek out professional guidance
with your paperwork in tow if you need to.

Good luck, and (hopefully!) congratulations!

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danieltillett
My feeling is you are going to end up like whenever the powerful divide a gold
mine - one party gets the gold and the other party gets the shaft.

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ZenPro
I know HN is not for comedy but I genuinely nearly spilled my coffee laughing
at this! :-)

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smoyer
Spilling coffee is a serious offense with the HN crowd ... but I laughed again
at the joke as I haven't heard if for quite a while. A great way to start my
day!

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ryanackley
I've been through three acquisitions/liquidity events. The second was my own
company.

It all depends on what your stock option program says. Both of the times I
worked for someone else, all options automatically vested on a liquidity
event. A liquidity event being the acquisition of the company. This seems
pretty standard so it may be the case for you. I don't want to get your hopes
up because it depends on your stock option program

That being said, the first acquisition I went through, the acquiring company
purchased the IP and not the company. The board of directors declared that
this didn't count as a liquidity event. Therefore, none of our stock options
vested . We all still received 6 figure retention bonuses in cash and stock
from the acquiring company that vested over so many years.

tldr; It seems pretty standard in the industry that your options would
automatically vest on an acquisition. Even if they don't, it's likely that the
acquiring company will offer you some kind of bonus to continue working for
them.

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memossy
You get to say you were lead developer and employee #1 of a startup that sold
for x when doing your own startup (this can actually be useful!)

You can also now negotiate market level salary or a loyalty bonus to stay and
ensure smooth takeover/handover. You are likely to get more this route than
via your equity if you have 1%.

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anthony_franco
> Suppose I have 1% equity vested over 4 years with 1 year cliff, what will
> happen to my stocks?

What does your employment agreement say? Depending on the terms you'll have
either 0%, 0.2%, 1%, or some other amount. Really hard to say anything without
knowing what's in your employment contract and the types of stock you were
issued.

> Its a cash-stock deal. Do I get any cash out of this acquisition?

Again, you'd have to read the terms of the deal. They might pay back the
investors at a multiple, and split up the rest to the employees. And it's
possible what's left for the employees could be very little, nothing, or a
lot. It's really hard to say without any information.

If I were you, I'd read carefully through all the employment forms you signed.
And if it's overwhelming, you should have a lawyer read them over to gain a
bigger understanding.

Just know that 1% equity doesn't necessarily mean 1% of the deal. It all
depends on the terms and the class of stock issued.

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vladimirralev
All depends on the ethics of the founders and the internal politics. Paperwork
has no value unless you had a top lawyer write the terms for you when you
joined. Legally, you have no equity right now, but in all likelihood you will
get something eventually when you sell some stock unless you have
exceptionally shitty founders.

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gamblor956
Sorry, but you probably won't get anything if none of your equity is vested
yet. You need to check your employment agreement to see if there is an
acceleration clause that accelerates the vesting of some/all of your equity in
the event of an acquisition or other ownership transfer.

Otherwise, if you're lucky, you might get a job at the acquirer with a salary
bump.

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keerthiko
You haven't hit your 1-year cliff, so I'm guessing unless the founder feels
some pity/gratitude towards you, or your equity vest/employment continues
beyond the acquisition (with the new parent) at the same terms, they're not
legally bound to give you anything =/

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fsk
Yeah, you don't have enough information to decide.

1\. What was the strike (and market cap/valuation) when you got your options?

2\. What was the acquisition price per share? How many shares are outstanding?

3\. How much did you get diluted when they raised money? Include liquidation
preferences.

4\. Is there any accelerated vesting clause on acquisition? Can they fire you
and you get nothing? The fact that they haven't tried firing you to cheat you
suggests your options aren't worth much.

Lesson for next time: When you are offered options as part of an employment
agreement, ask for a written contract and ask for details! Even if you do have
a good written agreement, you can still be ruined by liquidation preferences
given to new investors after you join.

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Major_Grooves
I'd always assumed it would be standard for all stock to vest immediately in
the case of an acquisition, otherwise there's not much incentive for the
employee to help you get acquired quickly (if that's the goal).

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anthony_franco
The problem with that is that the acquirer doesn't want to buy a company, then
have all the employees quit after cashing out. Then their left with a company
but nobody to run it.

So usually there's some sort of clause that requires the employees/founders to
stay with the company for some time before fully vesting.

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dspillett
As much as every acquirer will say about "investing in the team, not just
buying the product", aside sometimes for a couple of key people adding the IP
to their portfolio and integrating it with their existing offering (or keeping
it down if it competes with their existing offering) is their main interest.

Employee retention defaults to being managed by notice periods and other
contract conditions being inherited from the acquired entity, after that the
new owner and the employees need to negotiate (unless "keep as you are" is
what both parties want at this time). If you are on one month notice or less
start looking around just in case, if you are on six months you have plenty of
time to plan if things do look like working in a way you are not happy with.

Sometimes, again for key people, the negotiations happen as part of the main
dealing before the purchase (after purchase we'll X if you Y and not Z) by
proxy (the acquirer can't directly dictate anything at this point, but they
can say "we won't buy unless Y+Z is agreed, we promise X in return for Y+Z if
we do purchase" to the prospective purchasee and they then officially
negotiate with the employees).

It is about the IP. If you are directly and visibly important to the IP then
you are important to the purchaser and have a good negotiating position. The
buyer knows this and it will form part of their negotiation plan (to make sure
they have a viable business after purchase) so unless they are buying to
silence competition they are unlikely to do anything too unfriendly to the
existing staff (but make damn sure you raise any concerns you may have if you
get chance before anything is agreed).

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rahimnathwani
As others have said, this will depend on the specifics of your case (i.e. the
employment and other agreements between you and the company).

However, you implied a question about single/double trigger. If your contract
mentions single trigger vesting, it _typically_ means that some/all of your
equity vests on a sale of all or substantially all of the company. Double
trigger vesting is similar, but would require a second event (usually your
position being no longer available, e.g. if you were CTO and the acquirer
didn't need two CTOs) to trigger vesting.

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HorizonXP
This happened to me. The ability to say you were employee #1 in an acquisition
is much more valuable. I was fortunate that the acquiring company hired me and
gave me equivalent options at the same vesting schedule. I eventually left to
do my own thing, and funny enough, I'm now in the real estate business too.

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logicallee
For anyone else reading this. Anything that talks about equity isn't like an
employment contract (ever) and you should always read every word.

Same with a 7-page term sheet. Read every word! There is no such thing as
"standard".

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icedchai
Odds are you'll get nothing. And your options will be turned into options of
the acquiring company.

