Double trigger acceleration is a provision that can vest some unvested equity after both a change of control and a qualifying employment event. For founders, the key is to define those events and their timing clearly in the agreement.
What does double trigger acceleration mean?
Startup employees commonly earn equity over time through vesting. Double trigger acceleration changes what happens to some unvested equity if two specified events take place. The first is generally a change of control, such as an acquisition. The second is usually a termination without cause or a resignation for good reason after that transaction.
Both events must satisfy the agreement. A change of control alone does not typically activate double trigger acceleration, and an employment event unrelated to a change of control is not enough by itself. The clause also sets a period in which the second event must occur.
This structure addresses two different concerns. Employees may want protection against losing unvested equity in a transaction, while a buyer may want the opportunity to retain the team during a transition. Industry guidance describes double trigger acceleration as the market standard for employee and executive equity.
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How do the two triggers work?
The first trigger is generally a change of control. The agreement should state what qualifies. An acquisition is a common example, but the applicable definition is the one in the relevant documents.
The second trigger concerns what happens to the employee after the change of control. It commonly involves termination without cause or a resignation for good reason during the period specified in the agreement. The terms “without cause” and “good reason” matter because they define which employment changes qualify.
For example, if a company is acquired and an employee is subsequently terminated without cause within the contractual window, the second event may be satisfied. The clause may then provide for acceleration, depending on its terms. By contrast, if the employee stays in the role under the agreed conditions, the second trigger may not happen.
A resignation does not automatically count. The agreement may define good reason to include circumstances such as a demotion or forced relocation, but the contract determines whether a particular change qualifies. The circumstances and timing both need to meet the clause.
What should founders clarify in the agreement?
The label “double trigger” is not a substitute for precise drafting. Founders should read the actual provision to understand what it covers and how it applies to the equity arrangement.
Consider these points when reviewing the language:
- The change-of-control definition: Confirm that the agreement identifies the event that qualifies as the first trigger.
- The second event: Check how the clause defines termination without cause and resignation for good reason.
- The time window: Make sure the agreement specifies how long after a change of control the second event can occur and still qualify.
- The affected equity: Determine what unvested equity is subject to acceleration if both triggers are met. Do not assume a particular amount or percentage without checking the documents.
- The intended balance: Consider whether the provision protects employees while leaving a buyer a chance to retain the team through the transition.
The details are especially important when the transaction is underway and the employee’s role or working conditions may change. If the definitions are unclear, people may disagree about whether the stated events occurred. Founders should review the clause alongside their equity documents and transaction planning, and ask qualified counsel to review transaction documents.
What mistakes can make the clause unclear?
One common mistake is assuming that the phrase “double trigger” explains the full effect. It does not tell you, by itself, what counts as a change of control, which employment events qualify, or how much equity accelerates.
Other gaps can make the provision difficult to interpret:
- Treating an acquisition as automatic acceleration, even though the clause requires a second event.
- Leaving the post-transaction period undefined or unclear.
- Using “good reason” without specifying the qualifying circumstances.
- Assuming any resignation meets the contractual test.
- Failing to explain what happens to unvested equity after both triggers occur.
- Considering employee protection without also accounting for the buyer’s opportunity to retain the team.
A clear clause makes the conditions easier for employees, investors, and a potential acquirer to understand. It also helps avoid relying on assumptions about how the provision will work during a transaction. The agreement controls, so review the actual language rather than relying on a general description of the term.
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Frequently Asked Questions
Does double trigger acceleration happen automatically when a company is acquired?
Typically, no. The provision generally requires both a change of control and a second qualifying event, such as termination without cause or resignation for good reason. The agreement defines the conditions.
What can count as the second trigger?
The second trigger is often termination without cause or resignation for good reason after a change of control. The clause specifies which circumstances qualify, so a resignation is not automatically sufficient.
How long is the period for the second event?
The agreement sets the applicable window. It is often 12 months, but that timing is not universal. Check the contract rather than assuming a particular period applies.
How much equity accelerates?
The provision’s terms determine what happens to unvested equity if both triggers occur. A general description of double trigger acceleration does not establish a specific amount or percentage.
Why use a double trigger instead of accelerating equity at acquisition?
A double trigger requires a qualifying second event after the change of control. This can protect employees while giving the acquirer an opportunity to retain the team through the transition. The actual terms depend on the agreement.