4 ms·

I'm curious - what happens to the current set of employees in this situation? Presumably some of them have vested stock, and it just got zeroed out. If there's

I'm curious - what happens to the current set of employees in this situation? Presumably some of them have vested stock, and it just got zeroed out. If there's ever a good time to ragequit, this seems like the appropriate hour.

scurvy 8y ago
Stock is worth zero, but good employees will get retention packages to stick around with the new company.
- stickfigure 8y ago
  What's a realistic retention package for the engineering staff in this case? I'm genuinely curious.
  - scurvy 8y ago
    I'm not sure TBH. I've heard that startups and comanies in the UK generally don't offer large stock packages to employees. That could just be anecdata, but that's what I've heard. A 6-7 figure stock-based retention package would seem normal for the 3 acquisitions I've been through. Vesting length is all over though (short as 1 year, long as 4).
- gaius 8y ago
  but good employees will get retention packages to stick around with the new company Maybe. Often acquisitions are just for the customer list. Betfair is located in London (and Dublin for tax purposes IIRC), it has no office in Scotland.
  - vvvv 8y ago
    This acquisition was made to bolster their US strategy. CEO of FanDuel is becoming the head of the combined US entity.
rahimnathwani 8y ago
Why would you 'ragequit' at this time, and not before? If the value of the company of the company is less than the value of liquidation preferences, then the employees' stock is worth ~zero. Its value doesn't suddenly go to zero at the moment a transaction takes place. The transaction happens at that price because that's the value.
- bagels 8y ago
  The value of zero may not have been known to those employees before the transaction. Now they know definitively their options are worthless.
  - rahimnathwani 8y ago
    Yes. Very sad that option-holders and shareholders often do not have sufficient information about the rights attached to each share class, to estimate the value of their shares (even if they can perfectly value the enterprise overall).
    - marcus_holmes 8y ago
      The options-holders and shareholders may have perfect information about the share structure and preference structure of the company, but unless they're in the room when the deal is being done, they won't know what that means in terms of final value. The value of anything is the lesser of what someone will pay for it and what the owner will sell it for. The PE team may have raised expectations about the value before the sale, so that everyone thought they would get something despite the preferences. Then they sold it for less...
      - rahimnathwani 8y ago
        OK, so we agree that in order to value their shares/options, the employees need: 1) info on the share structure and preference structure 2) a somewhat accurate valuation of the company Whilst it's possible that people value their own shares wrongly due to missing/wrong info about #2: - (major) Misunderstanding or not knowing #1 almost always creates a larger error or uncertainty in the calculation, than does an error in #2, and - (minor) With #2, it's impossible to be certain anyway, so everyone has some of level of error

scurvy 8y ago

Stock is worth zero, but good employees will get retention packages to stick around with the new company.

stickfigure 8y ago
What's a realistic retention package for the engineering staff in this case? I'm genuinely curious.
- scurvy 8y ago
  I'm not sure TBH. I've heard that startups and comanies in the UK generally don't offer large stock packages to employees. That could just be anecdata, but that's what I've heard. A 6-7 figure stock-based retention package would seem normal for the 3 acquisitions I've been through. Vesting length is all over though (short as 1 year, long as 4).
gaius 8y ago
but good employees will get retention packages to stick around with the new company Maybe. Often acquisitions are just for the customer list. Betfair is located in London (and Dublin for tax purposes IIRC), it has no office in Scotland.
- vvvv 8y ago
  This acquisition was made to bolster their US strategy. CEO of FanDuel is becoming the head of the combined US entity.

rahimnathwani 8y ago

Why would you 'ragequit' at this time, and not before? If the value of the company of the company is less than the value of liquidation preferences, then the employees' stock is worth ~zero. Its value doesn't suddenly go to zero at the moment a transaction takes place. The transaction happens at that price because that's the value.

bagels 8y ago
The value of zero may not have been known to those employees before the transaction. Now they know definitively their options are worthless.
- rahimnathwani 8y ago
  Yes. Very sad that option-holders and shareholders often do not have sufficient information about the rights attached to each share class, to estimate the value of their shares (even if they can perfectly value the enterprise overall).
  - marcus_holmes 8y ago
    The options-holders and shareholders may have perfect information about the share structure and preference structure of the company, but unless they're in the room when the deal is being done, they won't know what that means in terms of final value. The value of anything is the lesser of what someone will pay for it and what the owner will sell it for. The PE team may have raised expectations about the value before the sale, so that everyone thought they would get something despite the preferences. Then they sold it for less...
    - rahimnathwani 8y ago
      OK, so we agree that in order to value their shares/options, the employees need: 1) info on the share structure and preference structure 2) a somewhat accurate valuation of the company Whilst it's possible that people value their own shares wrongly due to missing/wrong info about #2: - (major) Misunderstanding or not knowing #1 almost always creates a larger error or uncertainty in the calculation, than does an error in #2, and - (minor) With #2, it's impossible to be certain anyway, so everyone has some of level of error