Thanks to Libby Hadzima Perkins for her contributions to this article. You and your co-founders have begun exploring a new business idea. You plan to incorporate, build out a team…
We often are asked by clients about common terms for stock or option grants for advisors. Advisors are typically business or technical people that lend their time and expertise to…
This article briefly introduces each of the principal business forms in the United States, namely corporations, partnerships, LLCs and sole proprietorships. More detailed considerations and strategies in making an appropriate…
Most startups offer equity participation in their company to people providing services to the company, whether as employees, consultants, advisors or otherwise (which we will call “service providers” in this…
I often have a discussion that goes like this: New employee: “I want Founder Stock” Me: “I see, so you want to buy Common Stock” New employee: “No, I want…
Maybe you’ve been granting options and restricted stock from your equity incentive plan for a while now. Perhaps you and your team have developed a good process – you renew…
What is a Down Round? A “down round” is a financing in which a company sells shares of its capital stock at a price per share that is less than…
1. Experienced advisors Choose experienced advisors, including lawyers, auditors and financial consultants (if necessary), and get them involved early. Advisors who work routinely with the SEC and investment bankers –…
An appraisal right is the statutory right of a corporation’s minority shareholders to have the fair price of their stock be determined by a judicial proceeding or independent valuator, and the obligation for the acquiring corporation to repurchase shares at that price.
An earlier version of this post originally appeared on In The (Red): The Business Bankruptcy Blog, which I created for CEOs, CFOs, boards of directors, credit professionals, in-house counsel and others to…
Historically, private company stockholders would be expected to wait until the company went public or was acquired to receive any return on their investment. Over the last several years, however,…
Obtaining a listing of your company’s shares can be a long, demanding and complicated process which will have long term implications for your company. It is therefore important that you…
A serious buyer for your company is likely to present you with heads of terms (also known as a letter of intent, memoranda of understanding or term sheet) covering…
Many people think a high(er) valuation is the Holy Grail. Those people are (often) wrong. In pursuit of a high(er) valuation, founders often unwittingly give up valuable ownership percentage points…
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