Can you give a real example with numbers (fake numbers okay)? I can't begin to understand how owning a % of a company gets reduced to pennies in the end.
It's possible if a company has raised a large amount of funding and/or the investors have aggressive terms. Liquidation preferences[1] mean preferred shareholders get paid out before common stock holders receive any sale proceeds.
The article shared by Johnny555 is a good breakdown of the mechanics. Speaking to my own experience, my ballpark estimate is that I received an order of magnitude less money than I would have had I received my initial grant as a percentage of the final sale price. Pennies is hyperbole, but the amount I received from the 9 figure acquisition was thousands of dollars (instead of hundreds of thousands of dollars based on my original grant).