Generally, when a startup is acquired, people get paid in a number of tranches:
- First, debts get cleared in order according to debt types. This could be cloud providers, lawyers, employees who deferred salary, etc, etc. If there's still cash left..
- Then preferred (generally earliest) investors get paid back. Some investors will have liquidation preferences where they get 2-5X their initial investment. If there's still cash left..
- Then execs get their preferred shares cashed out. Depending on how many rounds they'd raised, they may own less than you think. If there's still cash left..
- Finally, general stockholders get paid. This is where most employees may actually get cash.
To further complicate things, some people could be in multiple places here. A founding exec may have lent the company money to get started, have preferred shares, and have common shares so they could get paid out in early levels but not at the end.
*There are WAY MORE nuances in this but the point is: You don't just say "total price divided by shares times number of shares = the cash you get"
Generally, when a startup is acquired, people get paid in a number of tranches:
- First, debts get cleared in order according to debt types. This could be cloud providers, lawyers, employees who deferred salary, etc, etc. If there's still cash left..
- Then preferred (generally earliest) investors get paid back. Some investors will have liquidation preferences where they get 2-5X their initial investment. If there's still cash left..
- Then execs get their preferred shares cashed out. Depending on how many rounds they'd raised, they may own less than you think. If there's still cash left..
- Finally, general stockholders get paid. This is where most employees may actually get cash.
To further complicate things, some people could be in multiple places here. A founding exec may have lent the company money to get started, have preferred shares, and have common shares so they could get paid out in early levels but not at the end.
*There are WAY MORE nuances in this but the point is: You don't just say "total price divided by shares times number of shares = the cash you get"