How it works is this: The acquiring company doesn’t care less how money is divided between investors and employees. As we’ve reviewed, what they care about is price per high-value person (that is, engineers and product managers). If that works out, and the form of payment is whatever admixture of cash versus equity they prefer (or are willing to put up with), the deal looks fine to them. Every acquiring company will have such a target price per person in mind when you seriously discuss a deal. Your job as deal negotiator is to get as close to that as humanly possible. The founders, however,
How it works is this: The acquiring company doesn’t care less how money is divided between investors and employees. As we’ve reviewed, what they care about is price per high-value person (that is, engineers and product managers). If that works out, and the form of payment is whatever admixture of cash versus equity they prefer (or are willing to put up with), the deal looks fine to them. Every acquiring company will have such a target price per person in mind when you seriously discuss a deal. Your job as deal negotiator is to get as close to that as humanly possible. The founders, however, have a more subtle view. A deal this small is likely not life-changing, fuck-you money. After you’ve rested and vested at the acquiring company, you’ll likely wade into the startup fray again, need to raise money, and again live in the startup ecosystem. Screw your investors and word will get around. Also, you may have a legitimate emotional bond with your investors. After all, they often stood by you when nobody else did and, like Sacca, potentially helped get the company sold. Thus, founders face a moral choice that’s quite ticklish. They can opt to reward their investors for their investments in time and money, but they’re essentially paying them out of their wallet. The deal is very much a zero-sum game between founders and investors in the final stages. To give you an idea of just how indifferent the acquiring company is to investors, keep in mind that Sacca was reputedly Twitter’s...
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