Could anyone with more info potentially speculate on what a theoretical acquisition of this kind would look like for the founders?
I have to assume founders are basically wiped out entirely by preferred shares / levered shares given to investors? Staff with equity obviously wiped out as well?
Seems like a situation where early investors enter the FIFO queue to recoup as much of their original investment as possible?
Even if founders are wiped out, they are usually still paid as consultants (or employees) at the acquiring company to help facilitate the transition. Compensation for these arrangements are often (well) above market in order to incentivize the founder to stay long enough to facilitate the transition.
But yea, in general if a company is bought for less than they raised in VC, the returns usually aren’t huge.
Comments
Could anyone with more info potentially speculate on what a theoretical acquisition of this kind would look like for the founders?
I have to assume founders are basically wiped out entirely by preferred shares / levered shares given to investors? Staff with equity obviously wiped out as well?
Seems like a situation where early investors enter the FIFO queue to recoup as much of their original investment as possible?
Even if founders are wiped out, they are usually still paid as consultants (or employees) at the acquiring company to help facilitate the transition. Compensation for these arrangements are often (well) above market in order to incentivize the founder to stay long enough to facilitate the transition.
But yea, in general if a company is bought for less than they raised in VC, the returns usually aren’t huge.
thanks!