Try before you buy…
The restriction on the shares need not be removed in equal parts over forty-eight months. In some cases, it is better to wait six or nine or twelve months before removing the restriction on any shares.
For example, suppose you are sharing equity with an early employee and you are unsure if they will stick around through the inevitable startup issues, or you are unsure that they are the best person for the job. You can provide them a shares grant, but with a “six-month cliff,” i.e., if they leave the company (either by quitting or being fired) before six months, all their shares will be repurchased by the company.
RULE 11:
When unsure about a teammate, use a cliff.
This protects the other shareholders and prevents the creation of an unhappy minority shareholder.
In the case of a six-month cliff, it is normal to unrestrict one-eighth (12.5%) of the shares on the six-month anniversary and the remaining shares over the following forty-two months.
In the case of a one-year cliff, it is normal to unrestrict one quarter (25%) of the shares on the six-month anniversary, and the remaining shares over the following thirty-six months.
In other words, the shares still get unrestricted over forty-eight months, they just do so in one big chunk after the chosen provisional period ends and then monthly thereafter.
