[rossjudson]

If preferred shareholders gain control, common shareholders are screwed (as in zero value). I speak from personal experience. In our case, the founders and top executives absolutely went down with the ship and lost everything.

Briefly, cash was needed and investors were found at an relatively early point. The agreement set a value (V) under which the proceeds would benefit the preferred shareholders (the new investors). After the agreement was signed, the new investors joined forces with another investor achieving control. A new entity was set up, controlled by the investors, and they used their control to force the sale of the company at V, instantly destroying all common shareholder value.

All of this was announced (in a rather gloating manner) by the new head of the company. "You report to me now", basically.

This did not sit well with the staff, who had been working hard for a while. I walked that day, and within a few days the entire engineering team did as well.

For their $5 million, they got office desks, a bunch of PCs, and some half-built software they had no idea what to do with.

I suppose that did not work out particularly well for anybody ;)

[musicale]

> For their $5 million, they got office desks, a bunch of PCs, and some half-built software they had no idea what to do with.

I suppose when they sold it off it was a good deal for some other startup that needed office equipment.

> I suppose that did not work out particularly well for anybody ;)

Sounds like the staff who quit probably enjoyed their revenge, and also got a great story out of it.