Acceleration provisions change what happens to unvested options in an acquisition. Without one, unvested equity typically carries over into a new vesting schedule at the acquirer, or is forfeited. This post explains how double-trigger acceleration works, how it differs from single-trigger, and where to look in your documents to find out whether you have it.
What is double-trigger acceleration?
Double-trigger acceleration is a clause that speeds up vesting after two separate triggers. The first trigger is a change of control, such as an acquisition. The second is a qualifying termination of your employment, typically being terminated without cause or resigning for good reason, within a stated period after the deal closes. If both occur, some or all of your unvested options vest. If only the first occurs, nothing accelerates.
How is it different from single-trigger acceleration?
Single-trigger acceleration vests equity on one event alone, usually the acquisition itself. Double-trigger requires the acquisition plus a loss of your job or role. Single-trigger is generally seen as the more employee-favorable version and is less common, since acquirers often want key employees to stay, and a clause that fully vests everyone at closing can reduce the retention value of unvested equity. Double-trigger is more commonly seen in venture-backed company plans, though it is far from universal.
What counts as the second trigger?
It depends on how your document defines it, and the definitions matter more than most people expect. “Without cause” usually means the company ended your employment for reasons other than a defined list of misconduct. “Good reason” is a defined term that typically covers things like a significant pay cut, a major reduction in your responsibilities, or a required relocation beyond a set distance, often with notice and cure periods you must follow. Read the actual definitions rather than assuming the plain-English meaning applies.
How long is the window after the acquisition?
It varies by document. Windows are commonly somewhere in the range of 9 to 18 months after the closing, with some shorter or longer. The window is part of what you need to find in your own agreement, since a termination one day outside it typically does not trigger acceleration.
How much of my unvested equity accelerates?
Also document-specific. Some clauses accelerate 100% of unvested equity, some accelerate a fixed percentage, and some accelerate only a set number of additional months of vesting, such as 12 months’ worth. The same company can use different terms for different groups, with executives often receiving more favorable terms than other employees.
Where do I find out whether my options have it?
In three places, in this order of usefulness: your individual grant agreement, the company’s equity incentive plan document (which your agreement usually incorporates by reference), and any employment or offer letter that mentions equity. Search the documents for terms such as “change of control,” “change in control,” “acceleration,” “double trigger,” and “good reason.” If none of those appear, your options likely have no acceleration, though the safest way to confirm is to ask your equity administrator directly and get the answer in writing.
Worked example
Say you hold 24,000 options with 12,000 still unvested. Your agreement has double-trigger acceleration of 100% of unvested options, with a 12-month window after a change of control, and defines good reason to include a base salary reduction of more than 10%.
Scenario A: your company is acquired and you keep your role and pay. No second trigger occurs, so the 12,000 unvested options continue on their schedule, or are handled as the merger agreement describes.
Scenario B: your company is acquired, and 7 months later you are laid off without cause. Both triggers occurred within the 12-month window, so all 12,000 unvested options vest.
Scenario C: same as B, but the layoff happens at month 14. The window has closed, so no acceleration applies.
FAQ
Do all stock options have acceleration? No. Many grants have none, and unvested options are simply handled according to the merger agreement or forfeited at departure.
Is double-trigger acceleration the same as double-trigger RSU vesting? No. They are different mechanisms with a similar name. RSU double-trigger vesting ties share delivery to a liquidity event such as an IPO. Double-trigger acceleration speeds up vesting after an acquisition followed by job loss.
What if I resign right after the acquisition? Usually that does not count unless your resignation qualifies as good reason under the document’s definition. A voluntary resignation without good reason typically does not trigger acceleration.
Does acceleration affect how my options are taxed? It can. Accelerated vesting can increase the amount of ISOs becoming exercisable in a single year, which interacts with the $100,000 annual ISO limit. Any excess is generally treated as NSOs. A tax professional can model the effect on your situation.
Can the acquirer override my acceleration clause? The merger agreement determines how options are treated, but acceleration rights in your existing agreement are contractual and generally carry through, subject to how the deal is structured. This is a point where reading the actual merger paperwork matters.
What to do next
Look for your acceleration terms, window, and good reason definition in your own grant agreement and equity plan before a deal is on the table, since the terms matter most once one is announced. You can model your own numbers at movewealth.io.
MoveWealth is not a broker-dealer, investment adviser, or lender. This is educational content, not financial, tax, or legal advice. Consult a qualified professional about your specific situation.