So, your startup is getting acquired! Congratulations. Depending on several factors, you may be in for the most exciting or devastating time of your professional life. Here are some tips and tricks to help you survive the process.
Culture — Turns Out It Isn’t Priceless
Catered lunches and uncapped vacation time are a great way to deal with the stresses of working at a small startup. Unfortunately, the “family” feel that you and the 80 other people who built out your company have enjoyed for the past few years is about to come to an abrupt halt. Your new corporate overlords have a fun, new approach to your established culture, including things like demolishing it and punishing anyone who objects. Don’t worry, they’ll make up for it with a picnic at some point. Maybe. Also, you’ll need to start wearing a suit.
Divide and Concur
Defining Preferred Stock
If you don’t know what preferred stock is, you may be in for a rough time. We suggest you start drinking sooner rather than later. Continuing to do a good job is not encouraged.
If you do know what preferred stock is, pull out that offer letter you signed when you started. Did you make sure your stock wasn’t common before you signed it? Oh…well, that’s OK. There are plenty of other unacquired tech companies out there. It’s just as simple as starting over!
Acquisition-Based Vesting Acceleration Triggers & You
As long as you have that offer letter out, let’s take a deeper dive. Is there anything in there that prohibits your company from demoting or firing you in connection with the acquisition? Oh…well, that’s OK. We suggest you start drinking sooner rather than later. Continuing to do a good job is not encouraged.
Valuation, the Mirage of Hope
Your startup was valued at 1 billion dollars! How exciting. Unfortunately, that means nothing. A “valuation” is about as binding as standing on your coffee table holding a Swiffer and shouting, “I am a wizard!” You’ll be lucky if you sell for $200 million, and even luckier if you personally see any of that money. Unless you are in fact a wizard, in which case, you will have the rare luxury of “creative” negotiation tactics…or a back-up job in Las Vegas.
Private Equity Firms — Your New Master
A private acquisition comes with all sorts of new challenges and oppressive changes. The people in charge now don’t know your name, and they want all the stock you were promised. And boy are they probably going to get it! If you want to keep even a part of what you thought was yours, now’s a good time to hire a lawyer and promise most of what you might keep to them.
Don’t Get Mad. A Referral Might Be All You Have Left
Sure, you feel like a dispensable cog, your stock was worthless, and you saw no cash. But you still gotta work! Your skillset keeps you tied to this industry, and your reputation is everything. You might want to throw a desk tchotchke through that glass conference room wall, but that’s a one-way ticket to supervising the Geek Squad counter. Choose wisely.
The Horror of the Payout
Not all acquisitions end in getting screwed. Just look at you! You were a founder, lead engineer, and good friend of the CEO. Today you received a significant amount of preferred stock and a hefty check for more money than you’ve ever had in your life. Now it’s time to sit back and watch as the thing to which you dedicated the past eight years of your life gets absorbed by a faceless conglomerate.
Like watching Picard become Locutus, your project will become a hollow shell of what it once was. A small and barely functional piece of a larger, more horrible industry. But don’t worry. On the bright side, you now have a hard number that tells you exactly how much eight years of your passion is worth. I’d recommend putting it into a spreadsheet – that’ll help you decide if you want to try again.
