I don't think this has ever been a throwaway term during an acquisition in cases where the investors proceeds were higher under their liquidation preference rights than they would have been under their pro rata stockholder rights.

Thinking back over all such deals I worked on as a startup attorney, I can't think of a single one where the liquidation preferences were not asserted by the preferred stockholders (i.e., investors).

The selling owners generally view it as a buyer's problem to figure out retention, which is usually accomplished by the buyer making equity grants to the team that vest over time following the acquisition.

Sellers sometimes have a similar incentive issue -- i.e., they need to incentivize a team whose equity will be worthless in an acquisition. This is often accomplished by some form of "management incentive plan" which can have all sorts of structures. But the gist is typically to set aside some of the acquisition proceeds for distribution to key employees or management.