It all depends on the start up. Some start ups have a lot of authorized shares and some have less. This is all reflected in the capitalization table (<a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Capitalization_table" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Capitalization_table</a>) of the company. The cap table also contains information such as the number of preferred shares and different rounds of preferred shares (Series A, B, ...).<p>What people sometimes don&#x27;t realize are the liquidation preferences on the preferred shares. The liq pref is usually 1-3x depending on who has the negotiating leverage. Out in SF, most liq prefs are 1x. This means on an acquisition, the investors get 1x whatever they invested first before any common shareholders get paid. This means that many acquisitions are not successful. A good recent example is Rdio (<a href="https:&#x2F;&#x2F;www.crunchbase.com&#x2F;organization&#x2F;rdio#&#x2F;entity" rel="nofollow">https:&#x2F;&#x2F;www.crunchbase.com&#x2F;organization&#x2F;rdio#&#x2F;entity</a>). They got acquired for 75M, but investors put in 126M. This means the investors lost money, but common shareholders (shares from stock options) got nothing.<p>A good scenario would be an acquisition where everyone makes money. A good recently example is Business Insider,investors put in 55M, but the company got bought for 343M easily clearing the investor liq pref (<a href="https:&#x2F;&#x2F;www.crunchbase.com&#x2F;organization&#x2F;business-insider#&#x2F;entity" rel="nofollow">https:&#x2F;&#x2F;www.crunchbase.com&#x2F;organization&#x2F;business-insider#&#x2F;en...</a>). Employees with common shares also probably made a good amount as well.<p>One thing that also hurts employees are the AMT taxes that are associated with exercising the stock options before a liquidation event. In the examples above, employees have to pay taxes on the spread of the strike price to the fair market value of when they exercised. If an employee had a lot of shares, the taxes could end up quite high.(<a href="http:&#x2F;&#x2F;employeestockoptions.com&#x2F;amttax&#x2F;" rel="nofollow">http:&#x2F;&#x2F;employeestockoptions.com&#x2F;amttax&#x2F;</a>)