My co-founder fired me, sold the startup, and I haven't gotten anything

Question

Some relevant details:- Some of my equity had vested before I was fired, and I have proof of my equity ownership- I found out from a PR release that the startup was acquired by a PE firm- We raised $2M in total from a VC. I'm aware that if the startup was sold for less than $2M, all of it would go to liquidation preferences- I heard through the grapevine that the startup was sold for less than $2M, but I have no idea if this is true, or if there were any shady dealings involved- I've emailed my co-founder to ask for details but he hasn't replied or informed me of anythingAs someone who isn't a multimillionaire, I have no idea what I can practically do to learn more about the acquisition terms, figure out if I'm owed any money, or if I'm getting screwed in any way. Is there anything I can practically do that would be worth the money?

anigbrowl · Accepted Answer

Talk. To. An. Attorney.If you don't know any (which would be weird if you founded a startup) call the State Bar wherever you live and ask them for referrals. You should absolutely not be trying to to open-source the solutions to your private legal problem. You're just setting yourself up for a counter-suit for defamation or suchlike.

eschneider · Answer

Talk. To. A. Lawyer.

Chandraa · Answer

Don't have a specific answer for you but:
10 person startup. $2M raise. PE firm. Smells a lot like aquihire where existing investors got back some money and that's it.
Note that even if the purchase price was more than $2m, it's possible that investors took all of it. Typically the liquidation preference is 3-5x.
And it the common shares got paid, it's all or nothing AFAIK. I've never heard anything different, but I haven't seen enough.
Regardless, generally speaking, an acquirer - especially a PE firm - would never take any legal risk in a transaction like this.

mtmail · Answer

7 weeks past since you last posted about the sale (https://news.ycombinator.com/item?id=38059219), have you contacted anybody in the meantime? Can you contact any employees that might have had significant share (received any kind of payout)?A strong worded letter by a lawyer is probably a good investment. You have shares and demand to know what happened to them.

ipaddr · Answer

Why would he sell for less than 2 million he would get nothing as well. Unless he restructured took preferred shared. But usually it is better to take a chance on a rebound.
A number of things could have happened. If he is not responding a cheap lawyers letter can clear that up. A sale could have some public records depending on who purchased.
How much did you own? 30%?

joshxyz · Answer

Talk to a.. well you know the drill anon.

codegeek · Answer

PE firms are notorious for paying peanuts and often a lot of comp. is not cash but stock based. Regardless, the cofounder cannot sell without your approval and if you indeed had equity, you can sue both the cofounder and the PE firm as they didnt do their due diligence correctly. PE firms usually wont want to assume that risk so I am surprised that they missed this.TL;DR: Get a Lawyer. You cannot do anything else.