I've had this situation happen a few times in my career, my advice is take the money and don't look back. Invest the money, burn it, buy rental properties with it,or go on a trip. It is always better to have a successful exit.
Ask HN: Ex-Founder. Should I take lowball buyout offer?
81–90 of 172 posts
Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#82Don't sell. If they are about to raise, then this is the perfect time to sell your shares to investors in the secondary market. If you offer your stake at any discount, they are irrational if they don't take it. Don't worry if you are bound to a non transfer-ability clause. Getting around that is always possible with a bit of lawyering. Also get someone else to handle the transaction on your behalf. You don't sound l…
For most practical purposes, there is no such thing as a "secondary market" for private company shares for "moderately successful" companies like these. The shares themselves will be subject to a shareholders agreement, the boilerplate for which prohibits their unauthorized sale.
Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#83Earlier quoted context omitted.
That's not the worst case. The worst case is where the other shareholders sue you for damaging the company.
Maybe I am not just into that area, but how can you win such a suit, by that logic you could sue anybody who short sells a company...
jacquesm is talking about corporate officers harming the company, not random investors
Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#84Don't sell. If they are about to raise, then this is the perfect time to sell your shares to investors in the secondary market. If you offer your stake at any discount, they are irrational if they don't take it. Don't worry if you are bound to a non transfer-ability clause. Getting around that is always possible with a bit of lawyering. Also get someone else to handle the transaction on your behalf. You don't sound l…
For most practical purposes, there is no such thing as a "secondary market" for private company shares for "moderately successful" companies like these. The shares themselves will be subject to a shareholders agreement, the boilerplate for which prohibits their unauthorized sale.
The type of agreement I'm alluding to transfers the beneficial value of the shares, voting rights, dividends, acquisition proceeds, etc. It's synonymous with selling the shares, when you are prohibited from doing so.
Mark Zuckerberg was on the buy side of a few of these type of deals. That's a "moderately successful" company.
Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#85Earlier quoted context omitted.
That's not the worst case. The worst case is where the other shareholders sue you for damaging the company.
Maybe I am not just into that area, but how can you win such a suit, by that logic you could sue anybody who short sells a company...
There is a huge difference between short-selling stock in a public company or offering privately held stock when you are not an officer. selling stock of a company that you are C-level exec of (or founder) and that you hit with 'bad news' during a fundraising round is not going to make you any friends.
Your co-shareholders could easily make a claim, whether it will stick or not is as always up to a judge but it's very dangerous territory, and you are likely operating outside your shareholder agreement (at least, all the ones that I've seen) and also likely outside of your mandate as an officer of the company (depends on your role, but usually you would be). These things have to be handled with some diplomacy and tact otherwise you could very well harm the company directly in such a way that the harm would be easy to quantify. Which is a very bad situation to be in, so make sure you play by the book when doing these things.
Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#86Earlier quoted context omitted.
That's not the worst case. The worst case is where the other shareholders sue you for damaging the company.
Maybe I am not just into that area, but how can you win such a suit, by that logic you could sue anybody who short sells a company...
Not sure about the US and not a lawyer, but often as a founder/board member you sign a shareholder agreement which includes a provision not to undertake anything which would deliberately cause damage to the company/other shareholders. There are perhaps other points as well. I imagine the US is more litigious here than Europe (where my experience comes from)
Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#87Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#88Earlier quoted context omitted.
Not for most people here, though. Do we really need to keep saying stuff like this every time anyone here mentions money? "$10 is a weeks worth of food for people in Africa, you know". $100k is a lot of money, no question. But it's only about 1-year's salary for a decently paid programmer. It's not enough to quit your job, and it's not even enough to buy a house in most major tech cities. Which is what the OP said "w…
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$25K USD is an egregiously large sum of money. I'd argue only $5K is necessary. If I were you, I'd move to somewhere like the Philippines and live like a king with $5K/year.
Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#89Don't sell. If they are about to raise, then this is the perfect time to sell your shares to investors in the secondary market. If you offer your stake at any discount, they are irrational if they don't take it. Don't worry if you are bound to a non transfer-ability clause. Getting around that is always possible with a bit of lawyering. Also get someone else to handle the transaction on your behalf. You don't sound l…
> Don't worry if you are bound to a non transfer-ability clause. Getting around that is always possible with a bit of lawyering.
Please expand on this.
Re: Ask HN: Ex-Founder. Should I take lowball buyout offer?
#90Don't sell. If they are about to raise, then this is the perfect time to sell your shares to investors in the secondary market. If you offer your stake at any discount, they are irrational if they don't take it. Don't worry if you are bound to a non transfer-ability clause. Getting around that is always possible with a bit of lawyering. Also get someone else to handle the transaction on your behalf. You don't sound l…
> Don't worry if you are bound to a non transfer-ability clause. Getting around that is always possible with a bit of lawyering. Please expand on this.
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