Tinder founders sue parent companies Match and IAC for at least $2B

- Match gave Tinder founders Tinder stock options, ~20% of Tinder's total worth.

- Since Tinder is private, Tinder founders could only sell options to Match. Match would then have to pay 20% of Tinder's 'Worth' to the founders.

- The founders could only sell at specific points in time, called "scheduled puts".

- Since Tinder is private, 'Worth' is not easy to objectively determine. They have to bring in an external party, give the party information on how the company is doing, and the external party then gives an estimate of valuation.

Obviously, Match has an incentive for valuation to be as low as possible. Tinder founders have the opposite incentive. thus,

- Valuation was agreed to be supervised by Tinder, to prevent Match interfering.

So Tinder founders alledge:

- Match removed some Tinder higher-ups and replaced them with their own loyal people.

- They then had the loyal higher-ups systematically devalue the company (give pessimistic outlooks, earning forcasts, etc) right before a Scheduled put, to influence the third party into estimating as low a valuation as possible

- Once the third party estimated a value of $3 billion, they merged Tinder into match. Since Tinder didn't exist anymore, the Tinder options transformed into $3 billion's worth of Match options.

At this point, any crazy future growth in Tinder would not directly translate into crazy growth in the payout Match has to give to the Founders if the cash out.

Essentially, beforehand the founders were holding on to X billion dollars of options, set to increase proportionally to Tinder's value. After Match's 'scheming' they found themselves holding on to $3 billion of Match options, no longer set to increase proportionally to Tinder's value, but to Match's value.

The founders argue that X > 3, and Tinder's value is set to increase much more than Match in the future, that Match also knows this and cheated for that purpose.

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Extra details are included, such as the fact that Match stood behind one if it's 'infiltrated' loyalists when he was accused of sexual misconduct, just long enough for him to execute the low valuation, then had him fired with a golden parachute. The defendants claim this is further proof that there was intentional foul play at hand.

If you have share options and you catch wind of a buyout, exercise (buy) the shares. That’s when you have a stake in the game.

You have to remember that the company that issued the options won’t exist (in the same form) once acquired, the options become worthless. Sometimes they’ll throw you a bone but that’s usually the bare minimum of what they can get away with.

For example, a company can give you options to purchase X amount of shares at a ridiculously cheap price ( like $0.0005 per share ). Many startups do this. Sometime in the future, you can exercise the option and get X amount of shares. If you don't exercise the option, then you don't get to buy shares at the agreed at price.

Many judges treat legal writing as a form of literature, and like to use interesting or creative language instead of just sticking to a dry boring style. I'm sure such judges would not mind some colorful language in filings as long as it helps get the point across.

A good lawyer will know if they are dealing with such a judge and write their filings appropriately.

Here are some examples of judges deviating from dry boring writing.

Noble v. Bradford Marine, Inc., 789 F. Supp. 395 (S.D. Fla. 1992) [1]. The section titles in the opinion are "Hurling Chunks", "Like a Winged Monkey Flying Out of the Ashes...", "NOT!", and "A Schwing and a Miss".

Fisher v. Lowe, 122 Mich.App. 418, 333 N.W.2d 67 [2]. A tree was hit by a car, and the owner of the tree sued. Defendants won and plaintiff appealed. The appeals court wrote this opinion:

  We thought that we would never see
  A suit to compensate a tree.

  A suit whose claim in tort is prest
  Upon a mangled tree's behest;

  A tree whose battered trunk was prest
  Against a Chevy's crumpled crest;

  A tree that faces each new day
  With bark and limb in disarray;

  A tree that may forever bear
  A lasting need for tender care.

  Flora lovers though we three,
  We must uphold the court's decree.

  Affirmed

  A  wayward Chevy struck a tree
  Whose owner sued defendants three.
  He sued car's owner, driver too,
  And insurer for what was due
  For his oak tree that now may bear
  A lasting need for tender care.

  The Oakland County Circuit Court, John N. O'Brien, J.,
  set forth The judgment that defendants sought
  And quickly an appeal was brought.

  Court of Appeals, J.H. Gillis, J., Gave thought
  and then had this to say:
  1) There is no liability
  Since No-Fault  grants  immunity;
  2) No jurisdiction can be found
  Where process service is unsound;
  And thus the judgment, as it's termed,
  Is due to be, and is,
  
  Affirmed
 

[2] http://kevinunderhill.typepad.com/Documents/Fisher_v_Lowe.pd...

[3] a publishing company that took copies of the public domain court opinions and added notes pointing out each important legal point in the cases, labeled those points from an extensive legal subject classification they maintained, and added indexes and cross references to the other cases in the same volume and in their prior volumes. This was in an era when everything was done with paper documents, not electronic.

People who grew up with electronic documents and networks might find it quite interesting to look into how legal research worked in, say 1970. They might expect it to be cumbersome, but it was actually quite reasonable, due to metadata companies like West and Shepard's [4].

[4] https://en.wikipedia.org/wiki/Shepard%27s_Citations

POTUS would disagree. Civility and basic courtesy are no longer popular. Such is the world we now live in.

Edit: Anyone care to dispute this? I don't agree with it, but I'm also not willing to ignore it.

You're not their target audience.

Moreover, the a lot of that legalese is generated directly or indirectly by the propensity of chancers with lawyers launching frivolous suits. So if I was a judge, I would be quite happy to read a nice explanation of how silly the plaintiff is being.

https://en.wikipedia.org/wiki/Pendulum_arbitration

I assume the bank acts as arbitrator, and IAC is one of the parties proposing a valuation? How do they remove the bank's incentive to side with IAC?

What's a FMV? F*ck My Valuation?

/joke

I think it's a for fair market value?