[atishd]

here's how the private investors did (roughly double returns to see at Cisco valuation): https://equityzen.com/path-to-ipo/appdynamics/ (disclaimer: i'm affiliated)

good news for late stage companies, now that public-only investors know they have some competition.

[nodesocket]

Wow, Lightspeed Ventures absolutely crushed it. $5 million series A is projected to be worth $300 million now. That's the kind of return that funds their entire VC firm for the next 10 years.

[dmode]

Is there a way to figure out how well employees did in this deal ?

[atishd]

Still waiting on official figures on employee retention to be announced, but it's fair to say all preferred concerted so whatever % employees owner will convert for a decent portion of the buy out price. Say the retention piece is 10% or $370M, an employee that had 0.10% should walk away with ~$3.3M ($3.7B x 90% x 0.10%) plus anything they get under retention

[chrdlu]

It looks like the acquisition price was about ~$14 or so. From the S1, it looks like the following:

2014 employees had strike prices of $1.70-$2.43 2015 employees had strike prices of $4.48-$7.02 2016 employees had strike prices of $8.10-$12.94

For the employees who didn't exercise and hold the shares for over a year, this exit might have been worse than an IPO. In the IPO scenario, they would have the option to hold the shares for more than a year which would make them eligible for long term capital gains. In this case, the employees with options will probably be taxed ordinary income tax which can be over 50% in some cases.

While they will still have a great exit, such a high tax rate is still painful. Sometimes for a company as solid as AppDynamics, it is worth it to exercise early.

If you don't have money to exercise early, companies like the Employee Stock Option Fund exist to help cover the costs of exercise and potential taxes.

(disclaimer: I work for the ESOFund)

[dmode]

That's pretty good.

[yueq]

Does the chart take liquidity preference into account?

[atishd]

Price clears liq pref, so yup - update tomorrow with new pricing

[yueq]

I guess the number would be different unless you have the details, e.g. their termsheets :)

[argonaut]

Yes, but not substantially. They raised a little under $300 million. Even if all of the money raised had a (high) 2x liquidity preference, that still leaves $3.1B to be distributed among the stock holders.

[jakozaur]

It depends on termsheet, but in most cases liquidation preference only hits when final price is low. Otherwise investors will pick the percentage.

[atishd]

In fact in this case late stage investors had a contractual right to buy shares at IPO signaling strength of company. Don't feel took naff for they investors though :)