It definitely makes for a more wrenching story, but it's hard for me to see how failing outright is somehow better than selling the team and keeping the service alive for 6-9 more months.
Perhaps it's because acquired companies tend to be more useful and more popular than companies that fail. So the cumulative disruption is greater for the acquihires than for the failures.
Or in other words, I would sacrifice many many startups to get EtherPad back again.
Hard to believe that a team that knows it will be able to be acquihired won't be phoning it in and slacking off. Same as people do when they have taken finals and know that grades don't matter anymore. If you know failure is at the end and not some big prize and do over you will naturally try harder.
