The former CEO of FanDuel, Nigel Eccles is suing his creation and former employer. In fact, Mr. Eccles is spearheading the lawsuit together with other founding members Lesley Eccles, Tom Griffiths, and Rob Jones and they filed a petition in Scottish civil court last month. The bases of the Eccles laws suit come from the so-called “waterfall” financial arrangement. Which essentially means that, if you’re an early investor you’re paid first. And it keeps on going until there is no more money to payout. And within hear lays Eccles ground of suing. As he claims that the $465 million valuations of FanDuel where low and would foresee a cumulated value that would reach up to $120 million and cover the founding teams share.
Leaving a little too early
Now, if the former CEO Nigel Eccles decided to remain CEO, it would be an entirely different story. As the current CEO, Matt King and an untold number of current FanDuel executives are in to make a good deal in the merge with Paddy Power Betfair (PPB).
And it’s not only the former CEO that goes penny less from this deal. In fact, People that owned non-preferred shares did not see any money in the merge. In the crowd owning non-preferred shares are employees that had the option to acquire ordinary shares. And this is the case for the founding members.
What’s the difference?
Well, as the company, FanDuel grew over the years, it made numerous funding and investment move, and they even split the shares. In essence, they broke the shares into two different categories, ordinary and preferred shares. To sum up, a preferred share has a higher claim of the company’s assets than an ordinary share. And would so have the way of right when a payout happens.
Additionally, one of the main difference between the two types of shares is that preferred shares receive a fixed payout while an ordinary stock may not. To be more precise, it all depends on the board of directors and their decision. Because they may decide to hand out payment or not, and in the case of this deal it seems that they opted out! So, Eccles is not happy about that!