[habitue]

So, the company failed. It might be profitable, it might have a war chest, but if the preferred shares are getting "some" money back and common stock is getting nothing, then basically what happened is that the company borrowed X amount of dollars, and was sold for some amount less than that.

It sounds like the company raised a round at too high of a valuation.

The rules around options really suck here (the 90 day rule isn't the company's rule, its a tax thing). There is a reason a lot of companies are moving to RSUs: they avoid forcing early employees to make long shot bets with a significant fraction of their liquid assets (or stay at the company potentially over a decade until a liquidity event)

[solumos]

Yep, this is pretty normal.

> It sounds like the company raised a round at too high of a valuation.

Not necessarily. A company's valuation can shift up and down due to many factors - but for whatever reason, they ended up underwater in the end.

It's also common for executives that were able to get a company to acquisition to receive a "golden parachute" - e.g. a 7-figure bonus for a turnaround CEO getting the company acquired within X months of being hired.

> The rules around options really suck here

Some companies are moving to NSOs now too, which have much more flexibility in terms of post-termination exercise windows (up to 10 years, I think).

[rognjen]

It would have been better if it borrowed because preferred shares are often effectively 100% interest.