From a well-known investor I know: “Saw some people claiming common doesn’t get paid in the Windsurf acquisition. They are wrong, you are right. I checked with Windsurf investors, everyone is getting paid, including common. The one wrinkle may be employees who aren’t vested. And preferred may be taking a disproportionate tax hit, because it doesn’t qualify for QSBS, just like Scale didn’t qualify.” Caveats: I haven't seen the waterfall myself, and these deals are complicated, and I don't like to get involved in someone else's business. But in the abstract, ideally all Windsurf employees should get paid as if it was a traditional liquidation waterfall. That may still mean some equity is underwater due to liquidation preferences, or some employees don't get paid if their equity hasn't vested. The underlying issue is that the Lina Khan-era FTC has made clean acquisitions harder, so companies need to do licensing deals like this.