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This came up in a meeting a couple days ago. Good Technology was valued at $1.1B. Blackberry bought it at huge discount from it’s value and the employees got screwed:
Around 9 a.m., hundreds of employees filed into a conference room or started up videoconference software to watch Good’s chief executive, Christy Wyatt, discuss the sale. Ms. Wyatt introduced BlackBerry’s chief, John S. Chen, who winkingly apologized for how his deal makers had driven Good’s final sale price down to $425 million, less than half of the company’s $1.1 billion private valuation.
In an investor document about the sale that was distributed to shareholders, employees discovered their Good stock was valued at 44 cents a share, down from $4.32 a year earlier. In contrast, preferred stock owned by Good’s venture capitalists was worth almost seven times as much, more than $3 a share. The paperwork also showed that Good’s board had turned down an $825 million cash offer just six months earlier, in March.
… and the preferred stock of the investors …
In Good’s case, the six investors on the board had preferred shares worth a combined $125 million. After the sale to BlackBerry, Ms. Wyatt, who has since left the company, took home $4 million, as well as a $1.9 million severance payment, according to investor documents. In contrast, startup employees generally own common stock, whose payout comes only after those who hold preferred shares get their money. In Good’s case, the board’s preferred stock was worth almost the same as all 227 million common shares outstanding.
… and some had paid taxes already …
For some employees, it meant that their shares were practically worthless. Even worse, they had paid taxes on the stock based on the higher value.
New York Times: ‘When a Unicorn Start-Up Stumbles, Its Employees Get Hurt’‘