Don’t the founders (and the board) still have fiduciary duty to the common holders?
You can’t stop the founders from leaving, but selling the crown jewel IP in a transaction that doesn’t benefit the shareholders seems a stretch.
Don’t the founders (and the board) still have fiduciary duty to the common holders?
You can’t stop the founders from leaving, but selling the crown jewel IP in a transaction that doesn’t benefit the shareholders seems a stretch.
> fiduciary duty to the common holders?
as long as the transaction is reasonable, they've held up this fiduciary duty.
And the minority holders will need to sue for damages in any case, it's not an "automatic" crime. The cost of that suit will be more than the value of the gains and damages awarded.
Therefore, minority shareholders in a startup are highly likely to get screwed - not to mention they don't get a say in decisions being made at the top.
The only thing preventing this is social pressure (ala, reputational damage, if the founder did it). And if the payday is high enough, the reputational damage is irrelevant (you'd be out of the game with a big enough payday!)
> The cost of that suit will be more than the value of the gains and damages awarded.
In many cases this is so, but here we are talking about tens of billions in value. Even a few percent of value won is worth lawyering up to the hilt for.
> as long as the transaction is reasonable
What does “reasonable” mean? If the OP is correct and selling the IP guts the company then it seems hard to justify. I also don’t think you can reduce the concept of fiduciary duty in this way. It’s a well-defined term of art with specific precedent.
There was a report groq missed revenue targets by 75%. It wouldn’t move hard for the board to conjure a “dire” sell or die story. As it’s not an acquisition, they are somewhat freed from proving market value.
It’s a good point, if they are actually struggling then a fire sale is justified.
The counterpoint would be that 3 months ago they raised $750m at a $6.9B valuation. Unless they are burning through that cash so fast that they need to start raising immediately, the missed target shouldn’t be an existential blow.
likely they can vote for the deal with their personal bias without any repercussions, whereas the CFO can be directly targeted so he stayed on the ship.