Your company is being acquired. The headline: '$4B acquisition by BigCo.' Your grant letter says you have 10,000 shares. How much do you actually get?
The answer depends on: the liquidation preference stack, your equity type (options vs RSUs vs PPUs), the deal structure (cash vs stock), and whether your unvested equity accelerates.
Liquidation preferences: the number that matters most
Preferred shareholders (investors) have the right to get their money back before common shareholders (employees) receive anything. A 1× non-participating preference means investors get their investment back, then employees share in the rest. A 2× participating preference means investors get 2× their investment AND share in the remaining proceeds. The difference to employees can be enormous.
Working the math: a realistic example
Company sells for $1B. Investors put in $400M total with 1× non-participating preference. Founders + employees own 30% of common. Calculation: $400M to preferred investors first → $600M remaining → employees + founders share 30% of that → $180M to the common pool. If the employee pool is 15% of common, employees receive approximately $27M total, split across all employees.
RSUs vs options in an acquisition
- RSUs: vested RSUs are typically converted to the acquirer's equity or paid out in cash at the deal price per share.
- Options: vested options are paid out as (acquisition price per share − strike price). If your strike exceeds the acquisition price, options expire worthless.
- PPUs: typically treated like RSUs — paid out at the deal price.
Acceleration clauses
Check your offer letter and equity agreement for single-trigger or double-trigger acceleration. Single-trigger: unvested equity accelerates at the acquisition close. Double-trigger: acceleration requires both the acquisition AND your termination (usually within 12–18 months). Most employees have double-trigger. Founders often have single-trigger.
Before your company's acquisition closes, get a copy of the cap table waterfall from HR or your stock plan administrator. This shows exactly what you'll receive at the deal price. If they won't show it to you, that's a red flag — but you can estimate it by counting investor preferences from public funding history.