Change of Control
Definition
An event that transfers ownership or control of the company — most commonly an acquisition, merger, or sale of substantially all company assets. Change of control is the key trigger for acceleration provisions. The exact definition varies by agreement: some include IPOs, some do not.
Real-World Example
Company A acquires your startup for $500M in cash. This constitutes a change of control under your equity agreement. If you have single-trigger acceleration, all equity vests. If you have double-trigger, the acquisition is trigger 1 — you still need to be terminated (trigger 2) for acceleration.
Common Mistake
Assuming your definition of "change of control" matches the legal definition in your agreement. Some agreements narrowly define it to exclude certain types of transactions (like mergers of equals or asset sales). Read the specific language in your equity plan.
Why It Matters
Change of control is the pivotal event that determines what happens to your unvested equity. The definition in your equity agreement determines which types of transactions protect you and which do not.
Related Terms
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