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What is the difference between single trigger and double trigger acceleration?

VestingEquityGovernance

Acceleration is a clause that vests unvested shares early when something happens. Single trigger acceleration vests on one event, a sale of the company. Double trigger acceleration needs two: the sale, and the founder then being terminated without cause or resigning for good reason within a set window afterward, commonly twelve months. Double trigger, usually for all of the unvested shares, is the customary founder term. Single trigger is the one investors push back on.

Why double trigger is the norm

An acquirer is buying a team as much as a product, and it wants the founders to stay through the integration. Founder stock that vests entirely on the closing gives the founders no reason to remain and gives the acquirer a retention problem it will price into the deal or solve by asking the founders to re-vest. Double trigger keeps the schedule running if the founder keeps their job, and protects the founder if the acquirer lets them go, which is the case acceleration was meant for.

What investors resist

Full single trigger on a sale, because of the retention point above. Acceleration on a termination with no sale involved, which turns a departing founder into a fully vested one. Acceleration for a resignation without a defined good reason, since that lets the founder trigger it. A window on the second trigger longer than a year or so. None of these is unlawful; they are terms an investor will ask to change before funding, and most companies leave them out.

Partial acceleration

A middle ground some founders agree on is partial single trigger, for example a quarter or half of the unvested shares vesting on the sale, with the rest double trigger. It is less common than full double trigger and gets the same investor questions in a milder form. These terms do not have to be the same for every founder, and Arabella's formation questionnaire sets vesting, buyback and acceleration for each founder separately.

Written by the lawyers who built Arabella. This is legal information, not legal advice for your situation, and reading it does not make us your lawyers. For a real dispute or a high-stakes decision, talk to a licensed attorney. More questions.