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I don't get the reason for this article's existence. Nothing is new or unusual here. In any acquisition, the CEO and senior staff simultaneously negotiate thei
by gyardley 15y ago
I don't get the reason for this article's existence. Nothing is new or unusual here.
In any acquisition, the CEO and senior staff simultaneously negotiate their compensation packages with the acquiring company.
This always leads to major conflicts of interest, which is why the board gets to approve the acquisition, and why in larger transactions there's often some outside help brought in to negotiate.
If the board doesn't like the proportion of the proceeds going to the employees, they can always block the acquisition. They have that power precisely for situations like this. Since Gowalla's board approved the Facebook acquisition, they're presumably fine with it.
As for the minor investors who've been kept in the dark - I'm sure they agreed to drag-along provisions in their investor rights agreements, which meant they didn't have to be consulted. You have the rights you agree to.
- viscanti 15y agoIt makes sense from the investor's perspective. They weren't going to get a better, more lucrative exit. Gowalla would probably just whither and die eventually. Instead, now the investors get to talk about how they had a "successful" exit, which might help them get future deals (most startups would prefer to raise money from someone with several exits). It seems like it was the best deal for all involved.