HACKER Q&A
📣 sadfounder2023

My previous startup was acquired, and no one told me anything. What now?


I was a co-founder of the startup, and still hold about 9% of the equity. My co-founder fired me some time ago, and I have not received any communication from them ever since. I found out from a random PR release that the startup was acquired earlier this month by a PE firm. I have yet to receive any sort of communication from the startup about the acquisition, much less the details of the acquisition. It's a small startup - ~10 employees, incorporated in Delaware, and a few million in VC funding. We use Carta, and I see my shares on Carta, but I don't see anything about the acquisition there either.

I have no idea what to expect to be honest. I am cautiously hopeful that my equity will be worth mid-six-figures, potentially even a million. But I wouldn't be shocked if the acquisition was for less than liquidation preference, and I don't receive anything at all. Given the relatively low stakes, I'm hesitant to spend a bunch of money on lawyers.

I'm trying to figure out:

1. Is the company required to reach out to me, and send me whatever money I am owed for my shares?

2. Is the company required to send me details about the acquisition?

3. I've heard some horror stories about ex-founders getting screwed over. The most famous being Zuckerberg diluting Saverin's stake in FB, and Saverin needing to file a lawsuit to get the money he was owed. What can I do to protect myself and figure out if the company is violating its fiduciary duties to me as a minority shareholder?

4. Besides the above, is there anything else I should be doing?

  👤 eseriue Accepted Answer ✓
(I'm not a lawyer and this isn't legal advice.)

The Occam's Razor hypothesis is that you're off their radar and they simply neglected to inform you. Acquisitions are crazy and stressful, and former employees are low priority. It's also typical that your termination is lots more emotional to you than those that fired you, so unless you're sure they hate you, it's possible to overthink this.

My instinct would be to write a short, friendly email to your co-founder. Something like:

  Congrats! Just saw the press release, that's REALLY terrific! 
  
  a little more small-talk... Are they upping the free snacks in the fridge? Any changes to your day-to-day job? 
  
  I'd also like to sync on the equity transfer. Carta still shows my original position in StartupCo. Could you forward any info on mechanics of the transfer? Or, could you point me to the right person at PE-Corp?

  Again, congrats(!!), this is outstanding!
If there's no reply, you could then reach out to PE-Corp, since they're now responsible for working with investors and shareholders.