Going to go a bit meta here, but this is useful information to know from the perspective of a potential target.

First, the startup has failed to launch. Done. Poof. Risk actualized, everyone lost all of their investment, roll it up. The doctor has called them into the office and told them they have days, perhaps weeks, to live so they should wrap up their affairs. This happens because the business, as envisioned/implemented, cannot get anyone to invest further in it and it has insufficient revenue to pay the bills. The money is running out, when it hits zero they are done.

And yet the company has obligations, to debtors, to their employees, to lease holders, what have you. Creditors get antsy because they don't want to be left with nothing so you get your creditors and lawyers on the phone you make a plan to liquidate the assets. This includes office furniture, any patents you may have filed for, equipment, laptops, window coverings, and of course the team.

There isn't any equity left, debts owed are more than the value of the company, you are "upside down". That is true for any of the founders or employees. The goal here is to get out from under the creditors without landing in court being sued personally somehow.

Now, its a crappy place to be, the founders gave it their all, but it didn't work out. Now along comes BigCorp. They always have more project ideas than people, and ideally they have deep(er) pockets. They have some idea of the quality of the founders and what they tried to achieve, maybe they have employed some of them in the past. That company makes the following offer, "You get what you can for the IP, office supplies, and equipment and we will settle the rest of your debts for you (called making the creditors whole), in exchange for the following people coming to work for us as a team." Of course unlike servers you cannot just 'sell' a team to BigCorp, the team actually has to agree to go there, so BigCorp puts together a 'package' which is contingent on all (or sometimes just most) of the people they ask for coming to work for them. Your job as the founder / board member is to sell this package to the team so that BigCorp will come through on their offer to settle the debts.

Assuming you come to an agreement, the startup makes a press release "Whoo hoo! We're joining BigCorp to do excellent things!", the investor puts "Acquired by BigCorp!" next to their investment, and everyone smiles, and everyone shakes hands, and everyone knows (or should know) that they swung hard and missed. The creditors go back to do what they do, the investors go off to look at other people to fund, and the founders 'do time' at BigCorp until they can get back into the game.

So in this scenario, BigCorp isn't buying the company, they are buying the team, they are simply facilitating the liquidation of the company assets. For what ever reason they don't feel like this founder person is necessary for the deal to go through, they don't need to 'pay extra' for them with a package. All the founders "got" out of this deal, is continued employment at a large company, and a chance to play again when their lockups expire there. The guy who didn't go to BigCorp can turn around and get right back into the startup game. I know it seems like the guy left behind got screwed but in the overall scheme of things that isn't necessarily true.