I started with Agile Space Industries in October 2019 and got some stock options when I signed on. Will those be worth something? That is, will there be a liquidity event (such as an acquisition or an IPO) that results in a stock price above my strike price?
I'm including acquisitions that have a cash payout, a stock payout via stock in a publicly traded firm, an IPO, or anything that puts a market price on my options. There may be times before that when I could exercise the options and sell the stock OTC before that; I'm not including those.
Agile has since raised money at valuations significantly above my options' strike price. (I've also gotten more since the initial grant, with a higher strike price; those are irrelevant to this question.) I've exercised some of the options in question, so I expect to both care about the answer to this question and to eventually get the answer, even if Agile and I part ways and I don't exercise any additional options.
I haven't reviewed my NDA or carefully investigated what information is public. I believe the above is all safe for me to say, but please don't expect me to answer additional questions. I may post publicly available info in the comments if it seems relevant.
I'll probably avoid trading in this market for a variety of reasons, but am not making any commitments about that.
1,000That is, will there be a liquidity event (such as an acquisition or an IPO) that results in a stock price above my strike price?
It is not specified if it is OP's liquidity event.
Previous stock options at private companies have resulted in a gain of value on paper during a SPAC, but after the 6-month lockout period ended I was in the red.
>That is, will there be a liquidity event (such as an acquisition or an IPO) that results in a stock price above my strike price?
Apologies if this is already well-known to you, but FYI it's possible for this to be true and for your options to still be worth nothing: if the company has (or adds) investors with a preference multiple that absorbs all the gains.
For e.g, a hypothetical company might:
- Start with 100 shares at $1
- Issue you 10 options at $1
- Sell 100 new shares to investor @ $2 with 4x preference
- IPO at $4/share
Fully diluted value is $4*210 = $840
Investor gets 4x preference * $200=$800
$40 is left to be divided between the 1x preference shares/options: ergo your options are worthless (you'd get 40/110 = $0.36 on the dollar by exercising them)
If it is the case, it's probably not something you can disclose here, so I'm mostly mentioning this for your benefit in case you weren't aware!
(there are many variants on the general form of the agreement above that can influence the value of your options on top of this, e.g. "participating preferred")
https://learn.angellist.com/articles/liquidation-preference
@draaglom You're right, the question is badly phrased. Thank you.
My intent is to ask about the price of common stock after any preference / multiplier impacts. My options have no such preference associated. I'm unsure whether I'm allowed to disclose information about what shares exist with preferences ahead of the common stock; I do have that information. The headline question is the one I'm trying to actually ask: will my options be worth exercising at the relevant time?
Suggested wording improvements welcome.
Hopefully my definition of "liquidity event" is at least somewhat reasonable. Are there obvious missing possibilities?