

Should I stay till acquisition or leave? - scorion

Hi,<p>Here is my situation:<p>--&#62; I have a job offer at a series B startup with strong potential. I like product,people and culture
--&#62; My current startup; series A ~5Mil is going through acquisition process
--&#62; I have some 1.5% equity with few months left in cliff.
--&#62; Current acquisition may be a talent acquisition or talent + product acquisition. 
--&#62; There are not many users or activity to show for.<p>What should I do?
1. Leave for better opportunity to cash out in future don't worry about potential gain currently
2. Stay back; go through the acquisition and join acquiring company for Cash plus Bonuses
3. Try to leave the acquiring company after cashing out on acquisition.<p>For option 3; how long does it take to get acquisition money sorted out. And what is your guess for acquisition price might be for a talent + product acquisition.<p>Please help me
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steventruong
So let's answer option 3 first. The acquisition price can vary a lot. There's
no telling what the end value is because there are too many unknown variables
here not being listed aside from the fact that you guys raised a $5M series A.
Even with that, we don't know what the terms of the Series A were and if there
were any liquidation preference. We don't even know if the acquisition is
purely upfront, is it cash only or stocks or both, any earn outs, etc...

Chances are, if this is mostly a talent acquisition and you guys don't have
much traction of any kind, I would probably assume the acquisition total isn't
going to be extremely high (although I could be completely wrong). That said,
at 1.5%, not sure if it'd be worth it (personal opinion). Obviously worth is
relative to the individual and may differ greatly for different people. Keep
in mind if there is no acceleration for early hires, your 1 year cliff is only
going to 25% of that (assuming standard vesting).

As for how long you need to vest, it depends on the acceleration set to
trigger at the time of acquisition. You might just end up not getting
accelerated and you would vest as you normally would had the acquisition not
occur. You might want to find out more info from the founders before making a
decision and hope they will disclose at least something to you. I would just
be honest about the fact that you're on the fence. They may need to disclose
that you're thinking of leaving to the potential acquirer (or at least they
should).

Without knowing much else, I am very hesitant to give any real advice here but
if it was me, money aside, I would do what I enjoy more. In this case, option
1 makes the most sense regardless of financial outcome, especially if you like
the product/company, the people, and the culture more (I'm assuming since you
never said anything about the current startup you're in). Hope that helps
_somewhat_

~~~
scorion
Thanks for quick and informative reply.

I talked to founders; they did mention that some acceleration in conjuncture
of retention package is in works.

And I have a double trigger acceleration in place as well. So I am thinking of
Option 3; but I don't know how practical that might be; given acquirer may
want to put earn out in place.

From valuation point of view; our product is compelling on paper but dont have
much traction; so the biggest question I have is can that be big. A good team
and decent product. If I compare offers; 5 times return on original investment
will break me even in terms of my offer with new company and their valuation.
So is it likely to get 5 times return in this kind of acquisition.

I also have one more question; will my departure negatively impact the
acquisition of company as I am one of three core engineers and joined at very
early stage.

~~~
steventruong
Possible but chances are weighed more heavily on founders, _usually_

