Ask HN: My company is being acquired. How can I maximize my upside as an IC? | Hacker News Reader

Ask HN: My company is being acquired. How can I maximize my upside as an IC?

The startup I work at is getting acquired. Unfortunately management won't (can't?) share anything but vague details. My main concern given the timing is that the valuation will be low and what's left of my equity will be eaten up by investor liquidation preference. Not sure there's much that can be done at this point, but I'm interested to get people's advice, both for what I can do now and for what I could have done earlier.

Will companies tell you what stock is actually worth at different valuations when you join? This seems like far more valuable information than the valuation as of the last round.

Can you negotiate with the acquirer for a retention plan? Unfortunately, as an individual the power balance is very much not in my favor. Has anything like a pop-up union ever been used to get a seat at the table on behalf of the employees?

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Your stock plan should have the data of the valuation when you signed on, and the most recent valuation. If you use something like Carta, that should all be available to you in the app. Even if you don't use an app, whomever own the stock plan should be able to give you that information.

Your compensation and retention is between you and your boss, whoever that is. You are unlikely to get good results by skipping the management chain and asking the acquirer for special treatment. But you should be able to have professional discussions with your boss about your value, and negotiate from there.

There is little chance that you can get a seat at the table for the actual acquisition. That simply isn't how acquisitions work, not unless you already hold a role where the leadership includes you in strategic discussions.

In short, talk to your boss about all your concerns.

Does your contract say anything specific about your stocks? Could try reaching a lawyer or union to see what are your rights.

I do have a contract with many pages of legal details covering definitions and contingencies, but not what I'm really interested in which is, what do I get at valuation $X.

Based on the $, I guess you are in the US, but in which state is your company registered? Every state has different laws that protect minority shareholders. Often, as minority shareholder, you are protected by law and you rarely have to sell your shares, if you don't want to. BUT as the legal system goes - and it is very complex in the US - there are more exceptions and loopholes than there are rules. You need to know your share agreement and all provisions as well as your state's law. Depending on the state and the form of the acquisition, certain states like Delaware and Texas allow it that minority shareholders can be forced out of the company (https://smallbusiness.chron.com/force-shareholder-sell-stock...).

Normally, you should first talk to the majority shareholders. Then talk to management, because they only act on behalf of the majority shareholder (I assume they are the same in your case). You could mention that it is your right to know. If they are still not transparent, try talking to a lawyer or somebody that you know has a similar contract in the same state and industry as you.

FYI: I am not a lawyer and this is no legal advice :)

It should be valuation divided by all shares equals value per share.

The tricky part is whether the valuation number you have is what the company is paying to buy your company or if it's the overall value. If it's the overall value, then you need to subtract your company's outstanding liabilities.

Stupid question but what does IC mean?

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Thanks

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