Single or Double Trigger Acceleration?

In the first installment of “What’s in my contract,” we look at single and double trigger acceleration clauses in your common stock purchase agreement.

I know that your contracts can seem long, tedious and confusing.  So in the interest of distillation and understanding, I’ll just be doing quick hits.

Single Trigger

  • Single trigger acceleration means that all of your currently unvested stock is immediately vested if there is a change of control of the startup.
  • A change of control is an acquisition, asset sale, and some mergers.  The definitions to this term are extremely important.
  • If you’re working at a startup seeking outside funding, you probably don’t have this.  You want it, though.
  • Investors and acquirers don’t like seeing this.  Part of the value of any startup is the staff and founders, and they have no incentive to stay if they are fully vested.

Double Trigger

  • Double trigger acceleration means that all of your currently unvested stock is immediately vested if there is a change of control in the startup, and you are terminated without cause.
  • The definitions to what constitutes a change of control and termination without cause are extremely important and should be spelled out.
  • You probably have this.  Close to an industry standard.
  • Investors and acquirers prefer this, as it tends to force important staff and founders to stay so their stock can continue vesting.
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