Single-Trigger Acceleration

Single-trigger acceleration means that stock held by a stockholder in a corporation whose stock is subject to vesting terms vests upon the occurrence of an accelerating event. Or, stated more plainly, if a certain event happens, then the stockholder gets his or her stock upon the occurrence of that event. Vesting terms are common for founders and key employees in startups, particularly in C Corporations, because those types of companies can have multiple types of stock, and vesting terms are more well accepted and understood than, for example, the vesting of equity interests in an LLC. Typical types of accelerating events include mergers or acquisitions of the corporation. The advantage of having accelerated vesting for the individual holding the stock that is subject to vesting is that the individual receives a greater percentage of ownership in the company automatically upon the occurrence of such a significant event. Single-trigger acceleration is one type of acceleration. Another type is double-trigger acceleration, which concerns the vesting of a stockholder’s stock upon the occurrence of two distinct events. Each event is deemed to be a trigger, and if both triggers occur, then the vesting occurs. Trigger (single or double) acceleration is uncommon in most small businesses that aren’t seeking outside funding or are fast growth startups.