Seems to me (as a startup employee) that downside protection and liquidation preferences should be required to be disclosed to all previous stakeholders (employees, prior investors, etc.).
Liquidation preferences are mostly there for the low exits -- the VC is trying to stop the founders from making ONE MILLION DOLLARS!!! by just selling it out right away for a low (but still very high for a pair of people) amount of money. I haven't found that this is a secret.
As an employee, you should assume that you aren't going to see much if the exit is low (no matter what the founders/VCs tell you).
I would also say that this is basically true for Angels if the company goes through a few more rounds and then fails to reach real exit velocity.
Does it needs to be asked? Isn't it transparency in operations and responsibility to people who believed and invested before in terms of effort or money? It is unbelievable, if they are hidden/undisclosed to remaining stakeholders.
I am wondering if employees get screwed by the tax man due to these inflated valuations.
1. Has a founder ever said "Don't worry, we'll take care of you?"
2. Has that founder ever delivered during the exit?
2. Nonetheless, they have always delivered more than what was contractually obligated (in the form as a retention bonus at the new company or some other commitment).
EDIT: Yes, and these were not traditional Silicon Valley startups, they were NYC/Finance area startups. The original founders were not developers (your "bros"), they were finance guys!
EDIT: also as a traditional employee (in my case developer), you will not be aware that your company is being readied for sale to another before it actually happens. Only, if you're a very tiny company like 10 folks maybe you can know. Otherwise a startup that grows from 10 to 100 or more, then forget it.
To clarify I was an early employee after a funding round and not before. Those who are employees before any funding round are basically "founders" and can get some sort of decent payout.