There are tricks. I've been through such an acquisition. The purchaser sets up a new "Philz Coffee Co LLC" then purchases assets and operations for the exact amount the preferred stock holders want. They then liquidate the old company. Because the old company was never legally "bought" the common stock holders are SOL because they now own stock in a fictional company. That's not to say they don't have options... but I am not a lawyer and that definitely involves lawyers.

Further reading:

https://en.wikipedia.org/wiki/Asset_stripping

Shocking that that's legal

If the purchase amount is less than the liquidation preference amount of preferred shares then there is nothing to pay common shareholders.

I agree with you and don't know enough to speak authoritatively. That being said, I did find this definition of liquidation (below). The article hints the business was in trouble, the way I'm reading it, if the sale doesn't cover all obligations, its would be a liquidation.

"Business liquidation involves selling off a company’s assets, such as equipment, inventory, and real estate, and using the proceeds to pay off debts and obligations. This process usually occurs when a business is no longer profitable, facing insurmountable financial challenges, or the owner decides to retire or pursue other opportunities."

This is precisely the reason for accredited investor requirements to invest in private companies, it’s extremely easy to be screwed over as a small-time shareholder in a private company.

The article flat out states that they ran out of money. That's the special circumstance. Basically this was a fire sale.

If there was no money (aka bankruptcy) then board, top management and other investors would also not get anything (divide remaining assets between all stock). But this is different, this is sale, not bankruptcy. Some people get money while common stock owners (aka company owners) don't get anything.

Right, that's what makes them common stock owners; their shares aren't preferred.