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

#1

Post by ta2121 » Mon, May 21, 2018, 7:05 PM UTC

Some recent events have led me to believe my employer is pitching the sale of our small startup. I have a small amount of equity in the company that is nearly fully vested. I know that its a long process and nothing is inevitable, but is there anything I can be doing now to be prepared for the exit in relation to my equity? I'm not concerned with being out of a job and prepping for my next gig but I'm sure others who find themselves in the same position might be.

I'd also love to hear anecdotal stories of sales from an employee with equity.

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

#2

Post by davidw » Mon, May 21, 2018, 7:56 PM UTC

You probably won't get anything much. Start looking for another job.

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

#3

Post by swagtricker » Mon, May 21, 2018, 7:58 PM UTC

Be prepared to get a bullet any moment. When it comes to company sales, no technical person is untouchable. Even if you "know" things couldn't be done w/o you, they don't. That equity that is 'nearly fully vested' would do much better in the pockets of founders who are fully vested and don't need to share another crumb with a fungible resource. I'm not exaggerating, and not joking. Anecdotal, yes: but layoffs to keep equity out of underlings hands do happen.

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

#4

Post by jpm_sd » Mon, May 21, 2018, 7:58 PM UTC

davidw wrote: post #2

You probably won't get anything much. Start looking for another job.

Indeed. The one close friend I have who participated in a successful sale of a startup said it made him a "thousandaire", so best to adjust expectations accordingly.

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

#5

Post by justherefortart » Mon, May 21, 2018, 8:00 PM UTC

Cash is king. Get cash. Don't sign over your equity without a lawyer and or accountant reviewing to see how you're fucking yourself.

I had many friends in the Bay Area get screwed on shit like this. Good luck, your'e screwed! :-)

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

#6

Post by byebyethepie » Mon, May 21, 2018, 8:03 PM UTC

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 equity and you only have options, you need to look at your agreement to see what happens to non-vested or vested but non-exercised options during the liquidity event (It is possible that they get wiped out or they get bought back by the company at some very low valuation). It is possible that you would need to exercise your options ASAP.

2. If you have equity and there's a sale in the works and you have voting rights (not all equity has voting rights ) then you will get to see and vote on the terms of the deal.

3. 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 )

4. You should presume that you will be terminated by the new company. Start looking for another job now.

5. Good luck.

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

#7

Post by aantix » Mon, May 21, 2018, 8:04 PM UTC

If I had to do it over again, to better my chances of increasing my retention bonus, I would have stayed at the job as close to the signing day as possible and then threatened to walk a week prior.

During the acquisition that I went through, we were promised that everyone was going to get great retention packages and salaries. At the end of the day, it was stock that amounted to several thousand (lol, vested over 4 years!) and my salary offer was the same. Completely laughable compared to the hype we were fed.

I was living in SF at the time. The additional amount I was offered I could have hustled part-time consulting and saved it within a few months.

I should have left.

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

#8

Post by [deleted] » Mon, May 21, 2018, 8:04 PM UTC

[deleted]

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

#9

Post by abstractbill » Mon, May 21, 2018, 8:08 PM UTC

There aren't very many concrete things you can do at this point. All I can come up with is:

- Find a good CPA if you don't already know one, just in case your equity turns out to be worth something

- Consider carefully whether you would stay (and for how long) if you were offered some kind of "golden handcuff" deal

- Start thinking about what you would like to do next

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

#10

Post by commandlinefan » Mon, May 21, 2018, 8:12 PM UTC

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 even mentioned "equity" and paid close attention to the salary because I knew that was the only actual real money I was ever going to get (I was right).