---
title: "What Is Leaver Provisions?"
term: "Leaver Provisions"
description: "Leaver provisions define what happens to a founder or employee's equity when they leave the company — distinguishing good leavers from bad leavers and specifying vesting acceleration, repurchase, or forfeiture."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/leaver-provisions
---

# What Is Leaver Provisions?

> Leaver provisions define what happens to a founder or employee's equity when they leave the company — distinguishing good leavers from bad leavers and specifying vesting acceleration, repurchase, or forfeiture.

**Leaver provisions** are the contract rules for what happens to your shares when you stop working at the company.

## How it works

Common frameworks label departures as **good leaver** (death, disability, redundancy, sometimes resignation by mutual consent) or **bad leaver** (fired for cause, competitive breach, voluntary quit without approval). Good leavers may keep vested shares or sell at fair value; bad leavers may repurchase at nominal or cost price.

US startups often achieve similar outcomes through stock repurchase agreements and vesting schedules without the "leaver" label. UK and EU deals frequently use explicit leaver language in shareholders' agreements.

## Why it matters

- **Founders:** Understand what you keep if you are asked to step down after a down round or investor-led CEO transition.
- **Investors:** Leaver terms prevent departed founders from holding large passive stakes or joining competitors with full cap-table ownership.

Tax treatment differs by jurisdiction: repurchase at below fair market value can trigger compensation income. Founders should coordinate leaver outcomes with personal tax advisors before signing shareholders' agreements.

Acceleration on change of control interacts with leaver rules — read both sections together, not in isolation.

## Common mistake

Ignoring leaver mechanics because vesting "has years to run." A CEO change at year two can trigger repurchase clauses you never read.

## Practical takeaway

Negotiate leaver terms when equity is granted, not at departure. Good leaver / bad leaver outcomes affect not only shares but reputation in the investor community — how you leave still matters for your next company.

## Related ideas

- Founder vesting and cliff
- [Key-person risk](/glossary/key-person-risk)
- Stock repurchase and double-trigger acceleration

## FAQ

### What is Leaver Provisions in simple terms?

Leaver provisions set the rules when someone with equity leaves — whether they keep vested shares, must sell back at a formula price, or forfeit unvested and sometimes vested stock for cause.

### Why does Leaver Provisions matter?

Investors want continuity and aligned incentives. Founders should negotiate leaver terms before they matter — especially around disability, termination without cause, and acquisition-related departures.


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Source: https://venturecapitaltracker.com/glossary/leaver-provisions