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The Corrosive Downside of Acquihires

Both Sides of the Table

But the press (and I suspect many of the senior execs of these companies) don’t really explore the corrosive downside of these acquisition. If I don’t commit to millions of dollars of acquisitions I will … die? That’s why liquidation preferences exist – downside protection.

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What is an employee retention or M&A carveout plan?

Startup Company Lawyer

Due to aggregate liquidation preferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless. If you can’t figure this out yourself, you should probably build a liquidation preference spreadsheet to model how liquidation preferences work depending on M&A transaction value.