CTO in a company being acquired. What to expect and how to maximize return
I'm currently a head of engineering and technology in a company that's being sold. Hire can I maximize my reward in this situation? The sale auction deadline is closing in and I feel there's something to be negotiated with the owners. Any experience in this?
There's likely nothing you can do short of getting them to issue you additional equity. Lawyers and acquiror will look over the cap table so there's a slim to nil chance you'll get screwed.
If the acquiror hasn't talked to you yet, your company is probably too small to where they really give a shit about you. But if you've been in diligence meetings between acquiror and your company, then you are probably important. If you are important, you can negotiate your equity package in the PF entity. You can be as aggressive or as cautious as you want but in that event, you do have leverage to say I'm out of here unless you pay me more. It would also depend on the nature of the acquisition; if you're a customer list acquisition then they probably don't need you / your tech, but if you're getting acquired for novel technology they'll need you to stick around. Hell if it's an acquihire for you (doesn't sound like it is) then you really have leverage.
In general I would say there's very little you can do to juice your personal gain at the liquidity event. Unlikely that it happens but you could theoretically buy secondary shares from other employees at a discount to the transaction price and collect the spread. Although I don't know why anyone would sell. You could also I suppose ask the founder to issue you more shares before it closes but not sure why they would do that since it's just diluting his payday and depending on governance you might need your current investors to sign off. Maybe there's an unused portion of the option pool you could encourage him to distribute before the transaction closes.
Just some rambling. Maybe something here is interesting. Good luck.
This is actually very helpful and I thank you very much for drawing my attention to some valuable points, particularly if this is a customer list acquisition or not. It isn't, we practically have no customers. This acquisition is about the tech and the team, and I've been involved in meetings with potential acquirors, in some cases more than once. The acquiror hasn't been decided yet but the auction deadline/date is near. I personally am not so keen on continuing with the acquiror (whoever they might be) since I have another offer as a CTO with a company that is 10 times bigger. Additionally I'll never be the CTO in the acquiror company since they probably already have one, so unless it is a really big company where a VP has significant pull I would rather jump to the other offer I have as soon as the close happens. So it sounds like the best thing I could do is ask for more equity before the deal closes since I have leverage now with the owners and just pull money on the exit instead of the acquihire side. Thoughts? Thanks.
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