Ask HN: I think my company might be selling. What should I be doing to prepare? • Hacker News Board

Re: Ask HN: I think my company might be selling. What should I be doing to prepare?

#31

Post by matt_the_bass » Tue, May 22, 2018, 5:45 PM UTC

byebyethepie wrote: post #6

Posting from a throw away account - I've recently exited a company after an acquisition. Employee payout was laughable: gourmet burgers cost more. There were tears and terminations. If you still think that you are in a small company, you are most likely going to be screwed (imaginary valuation would come crashing down). Things to consider: 1. Verify if you have options on equity or actual equity. If you do not have e…

> If you have equity and voting rights and the terms look terrible to you ( but you think the other party really wants for transaction to close and you are OK burning bridges, it is possible for you to get better terms for your shares than the general deal - a company may be willing to buy back your shares even at a premium just to make you go away )

This is great advice. Investors wouldn’t heasitate to do this. If you own equity, you ARE an investor and shouldn’t heasitate either.

Re: Ask HN: I think my company might be selling. What should I be doing to prepare?

#32

Post by askafriend » Tue, May 22, 2018, 9:25 PM UTC

jazzyjazzy wrote: post #29

askafriend wrote: post #27

Earlier quoted context omitted.

I want to point out that dilution isn't strictly bad if the final sale price of the company is high enough. E.g. if the company sold for a billion, then 0.01% would be a cool million dollars. It's better to own 0.01% of a billion dollar company than 10% of a million dollar company. Dilution can be beneficial in cases when diluting equity for cash in the short term would lead to an increase in the overall value of the…

FYI 0.01% * 1 billion = 100k

Ahh, good catch you're right. The point I was trying to make still stands though. Owning a small percentage isn't strictly bad and there are common scenarios where it can be favorable.

Re: Ask HN: I think my company might be selling. What should I be doing to prepare?

#33

Post by wtvanhest » Wed, May 23, 2018, 1:15 AM UTC

opendomain wrote: post #17

commandlinefan wrote: post #10

I've worked now for three separate startup/small companies in which I had some measure of equity. In all three cases, they did some legal sleight-of-hand to reduce that value to nothing. The first time it happened, I was outraged, and researched my options to fight back (I had none). The second time, I was hopeful but unsurprised when it turned out the same as it had before. The third time, I rolled my eyes when they…

I have had this happen to me several times as well. This should be illegal

This is one area that YC has been silent, but would benefit the echosystem long-term to step in. They should create guidance on employee friendly terms for equity.