1) He did not own 100% of that company. 2) There were 4 cofounders and 90 employees.
3) He got paid mostly in Uber shares that vested over time and he left before they vested.
Very difficult to answer this with specificity, but in general there are a number of factors that influence the amount of cash you ultimately net from a sale, including:
- Cap table: what % is owed to other founders, investors, employees, etc?
- The total acquisition price may include substantial legal and other fees that will lower the actual amount received by the owners or shareholders.
- How much of the acquisition is financed through cash vs. equity? Equity may vest over a certain time period, and be subject to certain requirements (your sustained performance, ability to clear legal scrutiny, etc.).
- Taxes.
Taking all of this (and probably more) into consideration, it doesn't seem unreasonable for a founder to ultimately net <10% of the total sale price. Again, this is all wild speculation in this particular case.
His company existed for a seven months in 2016 before being bought by Uber. It isn't clear (to me) if there were third party investors or what the cap table was, broadly. Purportedly 90 employees at time of sale to Uber.
his contract to sell w uber had a significant earn out, the 680m was based on hitting different tech milestones. He hit none of them before he was fired.
Why would you ever “sell” a company under such conditions? “We pay you $1T if you write a simple loop in the next two days.” Next day when you come to work: “Fired LOL. Do not cross Start, do not collect $1T.”
While this is a crazy example, I have been in very similar kind of position (not $1T for a loop, though) and been worried about the strong motivation to get rid of me on certain N+364 day timelines. It didn't happen and I was treated quite honorably. I think if you want your acquisitions to go well, you don't do cheesy stuff like firing people to save money (when the integration is otherwise going quite well) or else your future acquisitions will be harder. People talk.
Usually you don't agree to contracts that let you be fired for the sorts of things that don't end up with you in court. Buyers, being reasonable, refuse to sign contracts where they can't fire you for being a criminal.
The difference between a court and a contract like that is that the court is impartial and has a clear bar of criminality ("innocent until proven guilty" to some standard of proof), whereas it's always in the company's interest to fire you at a mere accusation of a potential crime (or non-criminal wrongdoing)...
Because that's a trick that only works once for the buyer so you know they're not going to pull it. It may not even work that one time because you'll tie them up in court.
I don't know what the CGT situation is in America, but in Australia of you own an asset (shares, property, etc) for less than 12 months before sale, capital gains tax kicks up to about 50%.
If you own things and sell them for a capital loss you get a tax credit to use later.
If you sell for a capital gain within 12 months then you will pay tax on the full amount of profit from the sale. For individuals this is just added to your income tax.
If you sell for a capital gain having held the asset for over 12 months you get a 50% discount to how much profit is taxed.
The tax credit for a capital loss can be used to offset a capital gain but it gets applied before any discount is applied.
I am not an accountant but I have listened to one.
That sounds essentially similar to the US system except that the US long-term capital gains tax rates are not exactly 50% of income rates. They're 0% of income rates on the low end, approximately 53-68% in most of the middle tax brackets, and 64% at the high end.
Typically you have to hold assets for a year for them to be taxed as capital gains. Otherwise it's just normal income, which caps out at 37%. Capital gains maximum rate is 20%.
Pedantically, the max cap gains rate is 23.8% with NIIT. (Also, these are the federal tax brackets; states can and mostly do impose additional taxes on both income and capital gains.)
CGT operates by treating net capital gains as taxable income in the tax year in which an asset is sold or otherwise disposed of. If an asset is held for at least 1 year then any gain is first discounted by 50% for individual taxpayers, or by 33.3% for superannuation funds. Capital losses can be offset against capital gains. Net capital losses in a tax year cannot be offset against normal income, but may be carried forward indefinitely.
For most CGT events, your capital gain is the difference between your capital proceeds and the cost base of your CGT asset. (The cost base of a CGT asset is largely what you paid for it, together with some other costs associated with acquiring, holding and disposing of it.)
There are three methods for working out your capital gain. You can choose the method that gives you the best result – that is, the smallest capital gain.
CGT discount method
Eligibility: For assets held for 12 months or more before the relevant CGT event.
Not available to companies.
For foreign resident individuals, the 50% discount is removed or reduced on capital gains made after 8 May 2012.
Description: Allows you to reduce your capital gain by
50% for resident individuals (including partners in partnerships) and trusts
33.33% for complying super funds and eligible life insurance companies.
How to do it: Subtract the cost base from the capital proceeds, deduct any capital losses, then reduce by the relevant discount percentage.
See: The discount method.
Indexation method
Eligibility – For assets
acquired before 11.45am (by legal time in the ACT) on 21 September 1999
held for 12 months or more before the relevant CGT event.
Description: Allows you to increase the cost base by applying an indexation factor based on the consumer price index (CPI) up to September 1999.
How to do it: Apply the relevant indexation factor, then subtract the indexed cost base from the capital proceeds.
See: The indexation method.
Other method
Eligibility: For assets held for less than 12 months before the relevant CGT event.
Description: Basic method of subtracting the cost base from the capital proceeds.
How to do it: Subtract the cost base (or the amount specified by the relevant CGT event) from the capital proceeds.
See: The 'other' method.
The total deal with Uber was worth about 20M upfront. The rest was milestone driven. Milestones didn’t happen bc Anthony got fired and there was a fatality that shut the program down.
Or maybe he off-shored the rest of his money? This < $100mil are the assets that are under his name and the rest are in tax havens/under different shell companies? Not sure whether that is possible. But it seems like rich people always have multiple ways of hiding their money.
This is a mid-century Hollywood myth that just won't die. Even when it was still possible to do so, a tiny, tiny minority of Rich Americans were actually evading taxes by hiding money overseas.
Today, it's virtually impossible to hide money overseas as an American after FATCA and various other crackdowns unless you are willing to entirely give up your US citizenship. Since the $USD is the reserve currency of the world, the US government has enormous leverage in mandating foreign banks to report on the assets of every single US citizen with money abroad.
In fact, foreign banks are so scared right now, many will refuse to even deal with Americans outright. It's a huge draconian nightmare for expats--99% of whom are not rich by any means.
Ironically, if you're looking to do something nefarious, the best place to do so is actually right here in the US! Numerous states allow you to create anonymous corporations and trusts.
- Beer virus is about to eat Seattle and SF Bay Area. If it does... then it will eat all the US eventually. Hospitals overrun etc. People won't be working. Most disruptive event since WW2.
- Supply chains run dry mid April. Huge supply shock... and will be arriving right as the beer virus starts to crush the west coast.
No one has a risk model that can price those things. It's entirely possible large institutions will go insolvent in the chaos.
Seems like a pretty big assumption that those two cities would be eaten. It's definitely spreading and causing disruption, but I don't really see how it's going to grind both cities to a halt. Especially with the current amount of information we have regarding the virus. We need to know more before we can draw such conclusions. China seems to be recovering already.
I think GP is referring to Florida’s generous homestead exception, which allows a debtor to keep his/her home (regardless of opulence) despite creditors’ claims.
Maybe for cases like this that involve literally millions of dollars, but it really helps normal people from becoming homeless if they fall on hard times for whatever reason.
Source: Family members went through bankruptcy in Florida and were able to get back on their feet much quicker because their house couldn't be seized.
Most states have a homestead exemption. But most states also have a limit on the value of that homestead.
Sure, you shouldn't lose your reasonable family home over debt. But that doesn't mean people like OJ Simpson should be able to keep their multi million dollar estates even though they have filed for bankruptcy.
And even in this case. Does Anthony Levandowski deserve to become homeless and destitute for what he did? No.
This is going to hurt him far, far more than what he did could ever have hurt Google. Yeah, maybe Google would have lost more than this on paper, but definitely not in terms of marginal utility. Google remains an extremely wealthy and powerful company and now Anthony is broke.
Remember you may be able to claim an exemption on your $5m estate but you need to pay the taxes and electric bill and it’s hard to do that when up to 75% of anything you make beyond minimum wage is garnished (I don’t think any state even allows this much but maybe). To be fair some states only allow up to 25%. And some states you cannot garnish at all, you can only levy bank accounts
I'm not sure how serious your were with the comment, but law enforcement and customs agencies around the world hold now considerable amounts of bitcoins.
https://www.cnbc.com/2017/12/14/ieee-analysis-shows-uber-pai...