What is double-trigger acceleration?
Double-trigger vesting acceleration is an equity provision under which unvested founder shares or employee options accelerate (vest immediately) only upon the occurrence of two distinct conditions — typically (i) a change-of-control transaction (M&A, IPO) AND (ii) involuntary termination without cause (or constructive termination/good-reason resignation) within a defined post-closing window (commonly 12-18 months). Double-trigger is the market-standard acceleration mechanism for venture-backed companies because it balances founder/employee protection with acquirer flexibility.
Mechanics
- Trigger 1 — Change of control: M&A, sale of all/substantially all assets, dissolution; sometimes IPO (less common).
- Trigger 2 — Termination event: involuntary without cause OR good-reason resignation (material role change, compensation reduction, relocation).
- Acceleration scope: typically 100% of unvested shares accelerate; sometimes partial (e.g., 50% or 24-month additional).
- Window: termination must occur within 12-18 months post-closing for acceleration to trigger.
Double-trigger vs. single-trigger
- Single-trigger: change of control alone vests all unvested — acquirer-unfriendly, harder to negotiate in seller’s position.
- Double-trigger: requires both CoC + termination — preserves retention incentives for acquirer while protecting founders against arbitrary post-deal termination.
- No acceleration: rare for founders; common for early employees in seed-stage companies.
Negotiation context
- Founders: typically secure double-trigger for 100% of unvested; senior employees may negotiate similar.
- Junior employees: usually no acceleration; acquirer absorbs vesting schedule.
- Tax considerations: US 280G excise tax on excess parachute payments may limit acceleration; non-US founders less affected.
Drafting double trigger
Double-trigger acceleration — change of control plus qualifying termination — is the market-standard balance: the buyer keeps retention power, the executive keeps protection from the post-deal purge. The disputes live in the definitions: the second trigger should cover termination without cause and resignation for good reason (compensation cuts, demotion, relocation — defined concretely), the protection window typically runs 12–18 months post-closing and ideally a short pre-closing window against anticipatory terminations, and the change-of-control definition must catch asset deals and mergers, not just share sales. State the acceleration fraction (100% versus partial) and the interplay with leaver provisions explicitly. Turkish phantom plans mirror all of this in payment-trigger language — same design, different instrument.