[rohanpai]

How will you know if someone is about to close or exit? I feel like startups go out of their way to keep that private.

[computer]

That's a problem. It's easiest if the exit is an IPO, since that's announced in advance.

I've seen this strategy used on a fairly large company about to be acquired by a public company, when there were already rumors going around before the acquisition. It caused the management there an enormous amount of stress, and they settled for a significant amount of money, even when they believed a court would rule in their favor.

You're an awful person if you use this, so better make sure the company you use it on is even worse.