Andy Garcia · freelance dev
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Nvidia Said It Was 'Not Acquiring Groq as a Company.' Two Former Engineers Want a Delaware Court to Decide Whether a License Plus the Team Is a Sale

October 7, 2026 7 min read

On Monday, October 5, a complaint became public in Delaware's Court of Chancery under the name Serebrin v. Ross, No. 2026-1291. The plaintiffs, Benjamin Serebrin and Joshua Rubin, are two former Groq engineers who left before the company's December deal with Nvidia but kept their stock. CNBC dates the filing to Friday, October 2. Bloomberg Law reports it was first filed under seal on September 29.

They sue Groq's former board and CEO, not Nvidia, over what Bloomberg Law, citing the filing, calls a "reverse acqui-hire" that involved buying most of Groq's assets and hiring most of its staff. Their claim, as quoted by CNBC, is that the board "sold the company to Nvidia without the stockholder vote Delaware law requires and without any process designed to test or maximize the value of what Nvidia bought." Groq's answer: "This lawsuit is meritless and we will vigorously defend ourselves against it."

These are allegations, not findings. But the question underneath matters to anyone holding startup common stock or options: when a buyer licenses the technology and hires the team, did it buy the company?

What the paperwork said

Groq's announcement of December 24, 2025 runs five sentences: a "non-exclusive licensing agreement" for its inference technology, founder Jonathan Ross, president Sunny Madra and "other members of the Groq team" joining Nvidia, and Groq continuing "as an independent company."

Jensen Huang's email to Nvidia staff, quoted by CNBC, drew the line himself: "While we are adding talented employees to our ranks and licensing Groq's IP, we are not acquiring Groq as a company."

What Nvidia's own books say

Nvidia's annual report for the fiscal year ended January 25, 2026 has a note titled "Groq". It says Nvidia licensed Groq's language processing unit technology "and hired certain Groq employees", and that "no customer contracts, existing products, or equity interests were purchased."

Consideration was $13.0 billion paid at closing plus $4 billion, including imputed interest, payable within a year. Nvidia recorded a $2.5 billion developed technology asset and $14.4 billion of goodwill, "primarily attributable to the workforce and future development of the licensed technology."

By my arithmetic, about 85 percent of what Nvidia booked for this license is goodwill, and the buyer's own explanation of that goodwill starts with the workforce. A license on paper. On the balance sheet, mostly people.

The complaint puts the license at $17 billion, consistent with the 10-K, and adds a second figure: $3 billion of Nvidia restricted stock units "for the Groq employees who moved with the technology." According to the complaint, 150 to 200 Groq engineers became Nvidia employees. It alleges that the funds which designated Groq board members were positioned "to enjoy windfall returns from the later squeeze-out", and that "a Board majority was conflicted as a result."

What remained, now Groq LLC, announced a $350 million round in August at a $3.5 billion valuation, with planned participation from Nvidia. The suit, quoted by Bloomberg Law, says the board "squeezed out those stockholders at a lowball price it set itself."

Everyone got paid. That is not the point

On December 28, Axios reported, citing sources close to the deal, that most Groq shareholders would receive per-share distributions tied to the $20 billion valuation. Around 90 percent of employees were said to be joining Nvidia, paid in cash for vested shares and in vesting Nvidia stock for unvested ones. About 50 had their entire packages accelerated in cash. Axios summed it up: "Everyone gets paid. A lot."

So this is not a story about common holders getting nothing. It is about who decided the split, and through which pipe.

In a merger, the price arrives through one pipe: the company's holders, split by the charter, after a vote. In a license-and-hire, there are two. One is what the company receives for the license, shared by class. The other is what the buyer offers the people it hires. The second pipe only reaches people with a job offer, and the board that approved this deal was, the plaintiffs say, conflicted in its majority.

Former employees who exercised and left sit in the first pipe only. That is exactly who sued.

The adjective doing the work

Section 271 of Delaware's corporate code lets a board "sell, lease or exchange all or substantially all of its property and assets, including its goodwill", only with a resolution adopted by a majority of the outstanding stock entitled to vote. A license is not on that list, and a non-exclusive one leaves the licensor owning the technology.

The National Venture Capital Association's model charter for venture-backed companies, in its October 2025 version, defines a "Deemed Liquidation Event" to include "the sale, lease, transfer, exclusive license or other disposition" of all or substantially all the assets. Exclusive. A non-exclusive license is not named, and whether it counts as an "other disposition" is the kind of question this case could put in front of a judge.

I build a LegalTech product for patent and invention work, so I live around the word "license." The adjective in front of it usually decides more than the noun. The plaintiffs, per Bloomberg Law, see no ambiguity: "New structures must comply with the law, just like old ones. Fortunately, drawing the line is easy in this case."

A pattern, and a separate fight

The structure is not new. A February 4 letter from Senators Warren, Wyden and Blumenthal to the DOJ and FTC names Microsoft and Inflection, Amazon and Adept, Google and Character.AI, Meta and Scale AI, Google and Windsurf, and Nvidia and Groq. In January, FTC chair Andrew Ferguson said the agency was "beginning to look very closely at how these things work." On September 10, Bloomberg reported a Justice Department investigation into whether Nvidia structured the deal to avoid antitrust review.

Those are antitrust questions. Delaware is asked something else: did the people who owned Groq get what a sale would have given them, and a vote on it.

In September I wrote that the foundation owns DuckDB, but AWS bought the people who write it. Groq is the same lesson from the shareholder side: the paper describes one thing, and the value moves on the payroll.

What I would read this week

Not legal advice: this is what I would read if I held common stock or options in a startup a large company might want.

First, your equity plan, not just your grant letter. Find the definition that decides what happens to unvested equity in a deal, usually "Change in Control", "Corporate Transaction" or "Sale Event", and check whether a license of the core technology or the hiring of most of the team appears in it. If not, a license-and-hire may never trigger it, and your treatment is whatever the deal says. At Groq, per Axios, the deal itself set those terms.

Second, the charter. Find "Deemed Liquidation Event" and read the license wording. If it says "exclusive license", a non-exclusive one may sit outside the clause that tells the company how to split sale proceeds between classes.

Third, know what you hold. Section 220 gives "any stockholder" the right, on a written demand under oath, to inspect books and records, board minutes included, "for any proper purpose." Options are not stock. Until you exercise, that right is not yours.

Founders drafting a plan or charter now can write the license-and-hire case into those definitions in one paragraph. Ask your lawyer what it costs you in a future negotiation.

What this case could change

If the Court of Chancery treats a license plus the team as a sale of substantially all the assets, boards doing these deals will need a stockholder vote and a price process they can defend. If it does not, the structure stands under corporate law and the fight stays with the antitrust agencies. I do not know which way it goes. I do know your option agreement was written before anyone was thinking about it.

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