Financial Glossary
Double-Trigger Acceleration
Double-trigger acceleration is an equity vesting provision that causes an employee's unvested stock options or restricted shares to vest immediately when two specific events occur in sequence: first, a change of control (typically an acquisition or merger), and second, an involuntary termination of the employee without cause (or constructive dismissal) within a defined period following the transaction, often 12 to 18 months. Both triggers must be satisfied; the change of control alone does not accelerate vesting. This distinguishes double-trigger from single-trigger acceleration, which vests equity on the change of control event alone regardless of subsequent employment. Double-trigger is the market standard preferred by acquirers because it preserves retention incentives post-close.
Problem & Application
An engineer at a SaaS company has 10,000 unvested options with an 18-month vesting period remaining. The company is acquired, and the acquirer keeps the engineer on staff for seven months before a restructuring eliminates the role without cause. Under double-trigger acceleration in the equity agreement, both triggers are satisfied: the acquisition was the first trigger and the without-cause termination was the second. All 10,000 unvested options accelerate immediately, allowing the engineer to exercise them at the pre-acquisition strike price before the option plan expires. Without this provision, the engineer would forfeit the unvested shares entirely. For founders and startup CFOs negotiating term sheets, understanding whether option plan provisions include double-trigger language is essential, as acquirers often prefer double-trigger precisely because it keeps key employees incentivized through the integration period, while employees and their advisors may push for partial single-trigger protection to reduce post-acquisition uncertainty.
In Short
Double-trigger acceleration protects employees and aligns incentives in M&A deals.