Here is a question I am confused about. Say a startup is being acquired for dual interests:
a) the product.
b) recruit team members
Say:
> Startup gets valued @ X. (for the company & recruiting team)
> The amount is paid out in cash (A) + stock swap(B): A + B = X.
I am assuming that the stock swap (B) will come some vesting schedule of 4 years or similar. So the team members will earn their shares over 4 years of employment etc.
Question:
Say a member of the team holds 10% equity in Startup, if vesting is fully accelerated. However the member is not going to join the acquirer.
Is the member entitled to 10% of X? Or 10% of A?
- It seems to me that 10% of X would be unfair, because the person is not joining the company & will not be working for those shares. While others will need to earn those shares through employment.
- whereas, 10% of A sounds tricky -> because if the entire deal is a stock swap only & no cash -> then the member gets 0.
Say: > Startup gets valued @ X. (for the company & recruiting team) > The amount is paid out in cash (A) + stock swap(B): A + B = X.
I am assuming that the stock swap (B) will come some vesting schedule of 4 years or similar. So the team members will earn their shares over 4 years of employment etc.
Question: Say a member of the team holds 10% equity in Startup, if vesting is fully accelerated. However the member is not going to join the acquirer.
Is the member entitled to 10% of X? Or 10% of A? - It seems to me that 10% of X would be unfair, because the person is not joining the company & will not be working for those shares. While others will need to earn those shares through employment. - whereas, 10% of A sounds tricky -> because if the entire deal is a stock swap only & no cash -> then the member gets 0.