It's not merit-based. If I'm an acquirer playing hardball the value of hiring those people is the damage to the acquired's valuation with other suitors and not anything to do with the peoples' abilities.
Let's say you're selling, I'm buying, and we reach a tentative agreement for $100M. While you're winding down your other options I talk to five of your key people and hire them each for $2M. The next morning I start in fresh: Without those people our new offer is $50M. By the way that's a generous offer, part of the team works for us so you're worth even less to other acquirers. And hey, what if the press got wind that you were trying to sell and your key people were leaving. Sounds like a company in trouble.
You might say that's an asshole thing that nobody would actually do but there's a reason the poster up top suggested covering it.
Looks like the equity the startup offered those employees was clearly not enough to keep them around if the big company was so easily able to poach them while their equity was literally in the process of being turned into actual dollars. Being horribly cheap with equity to employees is endemic in startups, maybe that will change it. So, still not seeing the problem here.
Let's say you're selling, I'm buying, and we reach a tentative agreement for $100M. While you're winding down your other options I talk to five of your key people and hire them each for $2M. The next morning I start in fresh: Without those people our new offer is $50M. By the way that's a generous offer, part of the team works for us so you're worth even less to other acquirers. And hey, what if the press got wind that you were trying to sell and your key people were leaving. Sounds like a company in trouble.
You might say that's an asshole thing that nobody would actually do but there's a reason the poster up top suggested covering it.