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The common stock might be worthless if the last money in had a 2x or greater liquidation preference. https://en.wikipedia.org/wiki/Liquidation_preference https
by asmithmd1 10y ago
The common stock might be worthless if the last money in had a 2x or greater liquidation preference.
https://en.wikipedia.org/wiki/Liquidation_preference https://en.wikipedia.org/wiki/Liquidation_preference
- tommynicholas 10y agoIt would have to be much more than 2x - 2x would still have no impact because the acquisition was 2x the price of the last round.
- asmithmd1 10y agoYou are right. I took a quick look at the cap table on CrunchBase and there is lots of smart money in it. It is definitely a win for the investors but how much of a win for common share holders is up to how hard the CEO fights for them.
- tommynicholas 10y agoSo true!
- morgante 10y agoI think everyone will be pretty happy. This isn't Marc's first company (he sold Quidsi to Amazon for $500M) and everyone I know was happy with that deal.
- Klinky 10y agoThese kinds of exceptions/clauses/preferences are exactly why people need to think twice before sacrificing their life over stock options. The process is not transparent enough, and even doing some due diligence to try to ensure you're not getting shafted often results in you still getting the shaft. Unless you're dropping major coin as an investor who can dictate terms, all stock options should come with a huge bucket of complimentary salt. It is pretty gross when founders/management try to incentivize burnout with false promises, while banking a nice payday at the end of the rainbow for themselves.