[gchadwick]

Another example of the growing trend of buying out key parts of a company to avoid any actual acquisition?

I wonder if equity holding employees get anything from the deal or indeed if all the investors will be seeing a return from this?

[lumost]

I wonder if such deals will create employee lawsuits. I'd certainly be looking at legal options if I was one of the founding employees.

[SilverElfin]

It should. Look at what happened at Windsurf when Google did something like this

https://news.ycombinator.com/item?id=44673296

[sandworm101]

>> one of the founding employees

If you were an employee, you were not a founder. A founding-employee would be someone who explicitly "invested" time/money into a company without compensation. If you are also an employee earning a wage you better have a written agreement stating what amount was "investment" and what amount was compensated wage.

[wmf]

The employees are getting paid twice.

[sandworm101]

>> one of the founding employees

If you were an employee, you were not a founder. A founding-employee would be someone who explicitly "invested" uncompensated time/money into a company without compensation and also worked as an employee. If you are also an employee earning a wage you better have a written agreement stating what amount was "investment" and what amount was compensated wage.

[exac]

In my career I've seen startups "shut down" and lay off the NA team.

I've seen venture capital acquire startups for essentially nothing laying off the entire product team aside from one DevOps engineer to keep everything running. I've seen startups go public and have their shares plummet to zero before the rank-and-file employees could sell any shares (but of course the executives were able to cash out immediately). I've seen startups acquired for essentially nothing from the lead investor.

In none of these scenarios did any of the Engineers receive anything for their shares.

Yet every day people negotiate comp where shares are valued as anything more than funny money.

[jbkkd]

I have a friend who worked in a company that got "not acquired" in a similar deal.

She didn't see a dime out of it, and was let off (together with a big chunk of people) within 6 months.

[sigmoid10]

As this gets more common, I think it will eventually lead to startups having a hard time attracting talent with lucrative equity compensation. It will be interesting to see how long it takes until this catches on among employees, but I already wouldn't take any positions in startups with a significant payment in equity anymore. The chances are slim that this pays out anyways, but now even when you are successful, noone will stop some megacorp from just buying the product and key employees and leaving everyone else with their stake in the dust.

[Eridrus]

Can you say more about why mechanically she didn't get anything?

If you exercise your options you have real stock in the company, so I don't see how you can get shafted here.

Did investors do some sort of dividend cash out before employees were able to exercise their options? (Obviously shady, but more about investors/leadership being unethical than the deal structure).

Would love to know more about how this played out.

[mupuff1234]

If I had to guess I'd say investors get their returns but non exec employees mostly get screwed.

[snarf21]

I was involved in a (obviously smaller) situation with an acquisition that went to a top consumer CPU maker (you can guess). The investors got nothing as the buyout money was used to fund new pivots in the existing company. So no options or shares were monetized and investors maintained their existing stake that had technically the save value, just most of the value was temporarily all cash. The only people to make out were the ones who went with the asset sale (retention bonus stuff) and the leadership that stayed (raises, etc.)

[chaostheory]

Is it related to the FTC’s “anti-monopoly” stance with Khan? It’s continue under the Trump admin since her successor supposedly approved of her work

[benjaminwootton]

It’s yet another way for investors to screw early employees whose face doesn’t fit.