Startups

Key employees at startup and acquisition

New broh
Mar 7

Hi

I’m looking for some data points from startup folks who were key employees in an acquisition (think director level and above, but not necessarily C*O).

How were you treated during an acquisition? Specifically, beside the payout of the equity you had, did you receive other incentives/retention bonuses to stay along with the new offer? Or pretty much the equity payout was the only tangible outcome?

Thanks

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  • Salesforce GQch66
    I was a key employee (VP Engineering) of a small startup during acquisition. Due to liquidation preferences, etc. equity payout was $0. I did receive a very low 7 figure package at the time that was 65% equity in the acquiring company (stock doubled within 18 months, yay) and 35% cash (escrowed with 50/35/15% payouts at 0, 6, and 18 months). Other key employees got similar deals.
    Mar 72
    • New broh
      OP
      Many thanks for your data point. How much was the company valuation at its peak, if I can ask?
      Mar 7
    • Salesforce GQch66
      You can ask, but that information was closely held and I don't actually know the answer. My best guess is probably $50 million or so, so not terribly large. We had an unusual funding arrangement in that we were funded on an ongoing basis by our sole investor.
      Mar 7
  • Facebook public2
    Varies wildly, was the acquisition for ip or people? Are you in finance (redudant) or tech. During integration new companies usually identifies who they want to keep and handcuffs them. If really large your equity is locked for 2 to 6 years anyway though.
    Mar 71
    • New broh
      OP
      Tech acquisition, so let’s say acquisition is for ip and customer base, and clearly also the tech leadership team (my role) since they are the only ones being able to drive forward the tech product, at least for a while.

      My question was: if I stand to make ~3M from an acquisition purely based on my vested and exercised common stocks at the current company valuation, would it be wise to just leave now and take that equity with me, or should I stay since I’m a key employee (on the tech side, so very involved with the core) and so the acquiring company could throw a lot more gold at me, on top of paying my vested and exercised equity?

      It’s essentially a time cost opportunity. I would love to go at FAANG but an acquisition here could happen in 1-2 years (or earlier) and I wouldn’t want to miss out on capitalize on the key employee “status” I gained inside the company. FAANG is not paying me as much as I am vesting on paper here every month, but I think I could grow much more quickly over there and ultimately catch up and with a better pedigree.
      Mar 7
  • Salesforce GQch66
    Probably worth noting that exactly 6 of 40 employees were "key" (CEO, CTO, COO, VP Eng, tech lead, infra lead)
    Mar 70
  • Mode DvVM00
    ridiculous question. this varies very widely.
    Mar 70

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