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What triggers a change of control?
Also known as change of control. For example, a change of control may be triggered by a sale of more than 50\% of a party’s stock, a sale of substantially all the assets of a party or a change in most of the board members of a party.
Why include a change of control clause?
Senior executives may have a clause in their employment agreement to protect them from termination if there is a change of control. If a material change in the ownership of the company results in them being fired, then the clause will ensure that they receive a significant payout in the event of such termination.
When should I Sell my stock options before an IPO?
Selling as soon as possible protects you from possible future losses. The IPO may be your first opportunity to cash in on your stock options. Don’t get greedy. The greatest gains are usually from the time you receive a grant of options until the IPO. The IPO exposes your company to public scrutiny.
How to keep control of your business after an IPO?
Here are some methods for keeping greater control of your business after the IPO. Publicly held corporations can choose to issue different classes of common stock. Each class comes with a different set of rights for stockholders. The most common practice is to issue Class A shares and Class B shares.
How does an IPO lock-up period save investors money?
Investors can sometimes save money by waiting until the lock-up period expires before buying the shares of a newly listed company. The chief purpose of an IPO lock-up period is to stop large investors from flooding the market with shares, which would initially depress the stock’s price.
How much should founders own at IPO?
Every startup’s financial journey towards IPO is unique. On average tech Company Founders owned 15\% (between all of them!) at IPO, and some owned none.