Can anyone provide any info on what actually happened here? The article says that the preferred was "worth" more, which is a pretty vague statement. I interpret this as meaning that they didn't convert because their liquidation preferences guaranteed a higher payout. What seems relevant to me, and anyone else who works at a pre-IPO startup, is what were the things to look for ahead of time.
According to Crunchbase, Good raised $291M in 4 rounds. Assuming those investors owned 40% of the business, then at $1.1B, common was splitting $660M (preferred would convert). At $425M, assuming 1x liquidation preference, common is splitting $134M, an 80% decrease. I think you could get to the numbers in the article assuming 1x participating or something similar.
This should have been pretty predictable to employees. You will not get rich if your company sells for only 1.4x the total amount invested.
I think the bigger concern (as far as employees are concerned) in this particular case is that the board turned down multiple more lucrative acquisition offers.
In addition to all the other issues mentioned here, the preferred/common split means that the preferred holders (ie the board) have much different incentives/risks than common - they can afford to "swing for the fences" due to the downside of liquidation preferences.
What most likely happened was that investors together owned closer to 80% of the business and possibly had liquidation overhangs and some sort of anti-dilution that ended up in a similar situation.
That's what liquidation preferences and overhangs do for companies that raise 100m+, they eat in the common.
According to Crunchbase, Good raised $291M in 4 rounds. Assuming those investors owned 40% of the business, then at $1.1B, common was splitting $660M (preferred would convert). At $425M, assuming 1x liquidation preference, common is splitting $134M, an 80% decrease. I think you could get to the numbers in the article assuming 1x participating or something similar.
This should have been pretty predictable to employees. You will not get rich if your company sells for only 1.4x the total amount invested.