I have to wonder if the employee stock options were worth anything? Most telling is that Walmart decided to throw ~$300M at the founders "and others" to retain them. Does that mean, in this case, that the founding team is the only one who walks away with a payday?
And to be clear, this isn't a cynical musing. I'm genuinely curious to see how this worked out for them.
There are always retention bonuses for the founders. What scenario would the options not be worth anything? It's a cash acquisition that is 2x larger than the post of their last round of funding which was fairly recent.
- A Zynga-like order: give back unvested stock or you're fired
- There were "hidden" bank loans / lines of credit that need to be paid back first. These may not be known to employees, but generally they are the first in line to be paid back.
- If the cash acquisition is assuming they hit some earn-out targets, there's a very, very good chance that they won't get 100% of the money, and in fact could get a lot less.
- If the investors had some sort of very tough terms where they get a 1-2x return before participating in the common stock, that could make this worth very little to employees.
#1 is the only one I can imagine (that was such a horrible situation at Zynga, I had family get hit), and given the founder, extremely unlikely. I understand why everyone wants a reason to be skeptical of this acquisition, but all signs point to a home run for everyone involved.
These kinds of exceptions/clauses/preferences are exactly why people need to think twice before sacrificing their life over stock options. The process is not transparent enough, and even doing some due diligence to try to ensure you're not getting shafted often results in you still getting the shaft. Unless you're dropping major coin as an investor who can dictate terms, all stock options should come with a huge bucket of complimentary salt.
It is pretty gross when founders/management try to incentivize burnout with false promises, while banking a nice payday at the end of the rainbow for themselves.
I took a quick look at the cap table on CrunchBase and there is lots of smart money in it. It is definitely a win for the investors but how much of a win for common share holders is up to how hard the CEO fights for them.
I think everyone will be pretty happy. This isn't Marc's first company (he sold Quidsi to Amazon for $500M) and everyone I know was happy with that deal.
It's important to consider that sometimes these acquiring company stock options come with additional vesting attached to them. It can be time based + milestone based.
And to be clear, this isn't a cynical musing. I'm genuinely curious to see how this worked out for them.