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If the company was sold for less than the investments (or not a lot more) and the employees really were fired, it likely represented no loss for the employees a
by SoftwareMaven 14y ago
If the company was sold for less than the investments (or not a lot more) and the employees really were fired, it likely represented no loss for the employees and perhaps a way to sweeten the deal for the acquirers. The employees don't see a loss, because their stock wouldn't pay out until after the investors got theirs (which may be at a minimum multiple). The acquirer has less risk because they can weed out anybody they don't want to bring along and the firing risk went to a defunct company.
- Someone 14y agoIf nobody loses anything in this transaction, why go to the trouble of incorporating a new entity? At the very least, the employees lost something: their job. However, in the US, that may not be a good reason for this maneuver either, as employers often/typically can fire personnel at will. So, there either must be something else, or the 'firing risks' are larger than I think they could be. Either case, I guess they will be sailing close to http://en.wikipedia.org/wiki/Fraudulent_conveyance#United_States http://en.wikipedia.org/wiki/Fraudulent_conveyance#United_St....