Why your 0.5% equity stake might be worth nothing at exit

Employees usually hold options over common stock. Investors often hold preferred stock, and preferred shares may have liquidation preferences that get paid before common holders in an acquisition.

That is why a company selling for millions does not automatically mean employee options are worth millions.

In an acqui-hire or modest acquisition, the investor preference stack can consume most or all of the proceeds before common shareholders participate.

Grantwise models the preferred stack separately for acquisition scenarios so the downside case is honest.

Nobody can predict the exit. What you can do is compare scenarios: low sale, decent acquisition, modest IPO, and great IPO.

A good equity decision comes from understanding the range, the assumptions, and the questions you need to ask before signing.