The acquiring company causes the liquidity pref to vanish regardless of the currency, if they're sensible.
huh? and how exactly would they do that in a legal way?
huh? and how exactly would they do that in a legal way?
Simple: The acquiring company turns to the VCs and says "If you want the acquisition to happen, you are going to waive your liquidity pref".
It's not complicated. And as for "legal", contracts are renegotiated all the time. You might in fact argue that the liquidity pref is put in as a throwaway, since it is rare that they are ever exercised.
If they are just after the team, they could just offer signing bonuses directly to the team. Such as when Borland didn't want to sell to Microsoft.
The team's BATNA to the acquisition is a signing bonus, or another job.
The founder's BATNA to the acquisition is a signing bonus, or another job.
The acquirer's BATNA to the acquisition is a giving signing bonuses, or hiring the team.
Everyone's BATNA is signing bonuses so if the VC screws around on the preference they get nothing. That's why were not talking about a team change because the best situation for everyone is for the VC to give up the preference.
You get deals done by presenting an option that is superior to the BATNA. (Assuming everyone is rational)
See KART / Indy for what happens when people are prepared to accept the BATNA in the face of a superior offer.