equity acceleration

Triggering Event

Contractual clauses define the specific moments when the vesting clock moves forward faster than the standard schedule. In an equity acceleration, the most common trigger is a double trigger where both an acquisition and a job loss must occur. This protection ensures that founders do not lose their earned interest during a corporate buyout.

It moves the economic benefit from the future to the present.

Retention Impact

Companies use these provisions to keep leadership teams focused during the uncertainty of a sale process.

Contractual Limitation

Not every share is eligible for this treatment. The equity acceleration clause might only cover half of the unvested shares or apply only to the first three years of service. Investors often negotiate these limits to ensure that the purchasing company still has a way to keep key talent after the deal closes.

These restrictions prevent a sudden mass exit of the entire management team on the day a deal closes. Such a limit protects the value of the acquisition for the buyer. Without these boundaries, the cost of the transaction would rise as the buyer would need to issue new grants to keep the staff.