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Philz Coffee close to closing deal to sell to private equity firm for $145M

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Re: Philz Coffee close to closing deal to sell to private equity firm for $145M

#81

Post by bruce511 »

deepsun wrote: post #80
bruce511 wrote: post #19

Earlier quoted context omitted.

Investing in shares is, like most things in life, a task that requires some skill and understanding. Hence the concept of accredited investors. When you're swimming with the big boys, it pays to know the rules of the game. Unfortunately employees getting or buying shares from their employer have little to no investment skills. Yes, it's possible for these shares to be worth something, but if the company fails, they'r…

Disagree. I exercised some small amount of options long time ago (like 10+ years). Never called, never cared, also thought it's long gone. But recently got a nice check from them out of the blue when they got sold to a larger company. Even though all the people I worked with long gone as well, including CEO. I checked the numbers, all seems correct.

I'm not saying there's never an outcome. I'm saying the percentage of positive outcomes is tiny compared to the number of players.

Congrats on the check. But I think you approached it in the right way. Assume they're worth nothing until proved wrong.

Re: Philz Coffee close to closing deal to sell to private equity firm for $145M

#82

Post by baristaGeek »

turnsout wrote: post #45
rconti wrote: post #25

Earlier quoted context omitted.

Pretty sure the barista's startup dream wasn't to have the stock they own to be cancelled.

But what's more quintessentially SF than realizing your options are worthless?

Exactly! Man… some people don’t get sarcasm

Re: Philz Coffee close to closing deal to sell to private equity firm for $145M

#83

Post by FreakLegion »

branperr wrote: post #26

Is there any good reason why preferred stock exists? It just seems like another tool to screw people over in favor of investors.

Yes. Preferred shares give investors their investment back first if things go wrong.

If an investor gives you a million dollars for a piece of your company, and you turn around and sell the company for a million dollars, then the investor gets their million dollars back and you get nothing. Obviously. Any other outcome would be shenanigans.

Under standard deal terms investors get 1x, i.e. their money back. That's all.

Re: Philz Coffee close to closing deal to sell to private equity firm for $145M

#84

Post by tptacek »

deepsun wrote: post #79
terminalshort wrote: post #59

Earlier quoted context omitted.

The article flat out states that they ran out of money. That's the special circumstance. Basically this was a fire sale.

If there was no money (aka bankruptcy) then board, top management and other investors would also not get anything (divide remaining assets between all stock). But this is different, this is sale, not bankruptcy. Some people get money while common stock owners (aka company owners) don't get anything.

Right, that's what makes them common stock owners; their shares aren't preferred.

Re: Philz Coffee close to closing deal to sell to private equity firm for $145M

#85

Post by xvector »

boothby wrote: post #62

> On his way out, he said that CEO Sadarangani urged him against exercising his stock options I'm curious about this, as it sets off a little alarm in my head. Is this a legal thing for the CEO to do?

It's not. CEO needs to be put in prison.

Re: Philz Coffee close to closing deal to sell to private equity firm for $145M

#86

Post by smcin »

quickthrowman wrote: post #72
terminalshort wrote: post #57

Earlier quoted context omitted.

The concept of accredited investors is nothing of the sort. It's an arbitrary income / net worth threshold.

It’s a check for ‘can this person handle losing a large chunk of money when they get swindled by management after investing in a private company’, which will almost certainly be the case if you don’t have more money to kick in every round (dilution) or don’t own preferred shares, or any number of other tricks. Google or Meta recently ‘acquired’ a company by offering them salary packages that matched the equity they h…

Which company was that?

Re: Philz Coffee close to closing deal to sell to private equity firm for $145M

#88

Post by smcin »

smcin wrote: post #86
quickthrowman wrote: post #72

Earlier quoted context omitted.

It’s a check for ‘can this person handle losing a large chunk of money when they get swindled by management after investing in a private company’, which will almost certainly be the case if you don’t have more money to kick in every round (dilution) or don’t own preferred shares, or any number of other tricks. Google or Meta recently ‘acquired’ a company by offering them salary packages that matched the equity they h…

Which company was that?

Not Abel.ai, so who?

https://news.ycombinator.com/item?id=44640343

Re: Philz Coffee close to closing deal to sell to private equity firm for $145M

#89

Post by nunez »

leeter wrote: post #34
CommieBobDole wrote: post #22

Earlier quoted context omitted.

The article implies that it's not a liquidation or bankruptcy, though, just a sale. I don't know how you can buy a company without buying its stock from the shareholders, given that they are the owners of the company, but there must be some special circumstance that's not mentioned in the article.

There are tricks. I've been through such an acquisition. The purchaser sets up a new "Philz Coffee Co LLC" then purchases assets and operations for the exact amount the preferred stock holders want. They then liquidate the old company. Because the old company was never legally "bought" the common stock holders are SOL because they now own stock in a fictional company. That's not to say they don't have options... but…

Shocking that that's legal
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