Multiple share classes are the norm even before the new acquisition types we see here. It’s extremely common in an acquisition for employee shares to be worth nothing while investor and founder shares are paid out.

But these new “acquisitions” aren’t even that. They are not acquisitions at all. They just hire the talent directly with perhaps an ip rights agreement thrown in as a fig leaf.

Hey, husband of that friend here, The bought company had huge debts to the investors (it is a startup, not tiny but small one, ran for several years) and after cashing those out from the purchase deal, the employees were left with shares that were worth 0$. (might be that the founders also grabbed some money out of that purchase, no one knows tho)

The employees of that bought company were given an incentive by the buying company to stay for a while and help tearing down and integrating their product into the buying company.

One could say shady, I'd say that it was just a bad deal.

There have been at least a half dozen of these deals in the past 1-2 years including Google “licensing” CharacterAI to pull their founders back into Google as valued employees.

In the deal mentioned above: my guess is that preferred class shareholders and common shares got paid out but the common shareholders had such a low payout that it rounded down to zero for most employees.

This can happen even in a regular acquisition because of the equity capital stack of who gets paid first. Investors typically require a 1x liquidation preference (they get their investment back first no matter what).