Ask a MoFo: Equity Fundamentals: Single- vs. Double-Trigger Acceleration Explained
When a founder, employee, or other service provider has shares or options subject to vesting, one common issue they may want to solve for is how unvested equity is treated at the time the Company is sold—single- and double-trigger-acceleration are two common approaches, although single-trigger tends to be more controversial.
What is Acceleration?
Acceleration refers to a provision in a stock option or restricted stock agreement that automatically accelerates the vesting of the equity if certain pre-defined events occur, such as (1) a change in control of the company or (2) termination of the holder’s services without cause (let’s call this a “trigger event”). Upon the trigger event, the holder’s equity will vest automatically, regardless of how long she has been with the company (i.e., time-based vesting) or the other conditions to vesting.
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