Acceleration, which is triggered only by involuntary termination (sometimes negotiated to be dismissed without “reason” or resignation for “good reason”), is another less frequent form of acceleration of the “single trigger” and can be included in an executive`s severance package. Investors tend not to like an acceleration with a single trigger during a sale, fearing that it will extinguish a potential buyer. As a general rule, an acquirer wishes to provide the day-to-day services of key team members to ensure continuous business development and seamless integration into the acquirer`s business. When the imputation system for these key members disappears at closing, the purchaser generally has to offer a more judicious set of storage in order to get the most important employees to stay with the company after the acquisition. A larger post-closing storage plan increases the transaction either for a purchaser or offset by a decrease in the purchase price, generally paying less attention to shareholders, and the acceleration of options when closing a sale also postpones the consideration of investors and other shareholders to employees with special vesting acceleration. Buyers may also be concerned about the prospect of transferring life-changing sums of money to executives, and then attempting to formulate sufficient storage packages to keep them in work during the sometimes difficult phase of post-acquisition integration, during which these employees may have new bosses and uncomfortable levels of corporate bureaucracy. Acceleration with a single trigger refers to the partial or total acceleration of a person`s vesting of options or actions based on the appearance of a single event, i.e. that event is the “trigger” of acceleration. Not only do trigger events vary in raising capital, but the outcome of a triggering event also varies.
Typically, during a trigger event, a loan or contractual agreement to pay money in exchange for equity is automatically converted into shares issuing to the investor. However, a company or investor may also have discretion. A trigger event can lead to the execution of the loan or contractual agreement to pay money in exchange for the repayment of equity (part or all) instead of converting it entirely into equity. It is customary for banks to issue debt at a certain interest rate under certain conditions. If you put z.B a loan, one of the requirements of a bank might be not to accept additional debts for the duration of the loan. If the borrower were to take on more debt, the triggering event or clause of the contract would occur.