Revesting of Equity and Other Founder Executive Concerns When Your Company Is Acquired
Summary
This article by Robert A. Adelson, Esq. guides founders and C-level executives through the common pitfalls in acquisition agreements — with a focus on revesting of equity, vesting acceleration (single vs double trigger), post‑acquisition compensation and fresh equity grants, and restrictive covenants such as non‑competes and non‑solicits. It explains why buyers push for revesting, how revesting can unfairly strip value from founders, and gives practical negotiation strategies to protect liquidity, career freedom and future upside.
Key Points
- Revesting is now a standard buyer demand; founders should negotiate to protect most of their past-earned equity and limit the portion subject to new vesting.
- Aim for shorter or performance‑based vesting periods (not a blanket 3–4 years) if you already have substantial prior service.
- Resist the double‑trigger trap; seek single‑trigger acceleration or protections so the buyer’s payday is also your payday.
- Negotiate a meaningful retention package: market salary, realistic bonus targets and fresh equity (options, RSUs or restricted shares) to share in future value you help create.
- Limit the scope and duration of restrictive covenants — define competitors, narrow non‑solicit terms and ensure confidentiality clauses don’t bar you from using your skills and relationships.
- Use your leverage — buyers need founders’ leadership — and retain executive employment counsel separate from M&A lawyers to protect your individual interests.
Why should I read this?
If you built the business, don’t let the deal paperwork turn your payday into a long lock‑in. This is a straight‑talk, founder‑focused checklist of the clauses that will bite you later — and the simple counters to ask for now. Short version: know what to push back on so you actually get paid and aren’t boxed out of your next move.
Author style
Punchy. The author writes from an executive‑law perspective and makes clear this isn’t academic: these terms materially affect how much founders walk away with and how free they are afterwards. If you’re a founder or senior exec facing a sale, read the details — it’s one of those times you can’t afford to skim.
Context and Relevance
As M&A remains a common exit route for startups and growth companies, buyer standardisation around revesting and retention packages is rising. This article is timely for founders negotiating exits or retention terms: it links legal strategy to real commercial leverage and highlights trends (longer non‑competes in M&A, double‑trigger acceleration attempts) that executives must counter. Good practical guidance for those negotiating with investors and acquirers in 2025.
