Berkonomics

AUGUST 27, 2020

Email readers, continue here…] But maintaining such an electronic or physical facility is time-consuming and costly. Because deal rooms have multiple applications, the best advice is to begin the process right after incorporation and make keeping it current a continuing job of your financial senior management. The payoff.

Software Review 62

Software Review Due Diligence Intellectual Property IPO 62

Berkonomics

FEBRUARY 23, 2017

Most of us work in our businesses, either as managers or owners, and rarely step outside to think about how this will end in a perfect world. Email readers, continue here…] But this question begs for a positive answer. It is a fair question. How would you like to see your finish line?

Liquidity Event 102

Liquidity Event Valuation Email Management 102

Berkonomics

SEPTEMBER 20, 2018

Most entrepreneurs and certainly all investors would like to see “a positive liquidity event” (a good sale of the business) someday. This could be our intellectual property, our geographic reach, our superior product, our management team, or perhaps our dominant position. So, that’s the reason for this insight.

Liquidity Event 48

Liquidity Event Intellectual Property Naming Acquisition 48

Berkonomics

JUNE 12, 2014

It is rare when one person starts a company, supplies all the funding, and shares no management tasks or equity with others, and still grows the company to any significant size, worthy of a multi-million dollar opportunity to cash out at exit. Email readers, continue here.] Think of it as the rule of the thirds.

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

Berkonomics

JULY 5, 2018

Then again, you may be an architect or doctor or other professional managing your. Email readers, continue here…] All businesses and their management should be aware and perhaps planning for the end game, and that includes boards of directors as well. Dave’s book on exits.

Intellectual Property 90

Intellectual Property Management Stock Options Stock 90

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). For those of you who fit that description, nice work.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Berkonomics

JUNE 15, 2017

Email readers, continue here…] There are also clauses in many such investor documents that allow the investor to override the founder and force a sale of the company if a proposed sale is attractive to an investor for liquidity, even if the founder feels that there is much more potential if the business is not sold at the present time.

Liquidity Event 97

Liquidity Event Initial Public Offering Dividend Valuation 97

Berkonomics

SEPTEMBER 19, 2013

Email readers, continue here.] It is up to management to scale the development, marketing and production based upon resources available. The liquidity event and beyond' “How quickly did you and your team change the plan when faced with the first signs?” “Did Did you seek outside guidance?”.

Liquidity Event 81

Liquidity Event Angel Investor Email Entrepreneur 81

Berkonomics

DECEMBER 28, 2017

As you follow these insights from ignition to liquidity event, you’ll detect a continuing theme, emphasizing the need for deep and wide relationships that the CEO and senior staff can call upon for advice and guidance. 15% typically is spent on direct management issues such as supervision of next level subordinates.

Balance Sheet 97

Balance Sheet Liquidity Event Government Restful 97

Berkonomics

NOVEMBER 1, 2018

Some companies, especially those financed by angel or VC investors, have good, formal stock option plans with properly priced options set to reward all employees and managers in the event of a corporate sale. Email readers, continue here…] Now, there are three kinds of exits. Formal option plans for some.

Stock Options 192

Stock Options Stock Distribution Programming 192

Berkonomics

JUNE 2, 2010

I discovered the power of employee feelings of ownership early in my management career, establishing an employee stock ownership plan (ESOP), once popular as incentive compensation as well as a tax write-off for corporations and even a way to slowly transfer ownership of a company from the founders to the employees.

Liquidity Event 86

Liquidity Event Stock Options IPO Stock 86

Berkonomics

SEPTEMBER 26, 2013

You’ve informed your top management of the pending deal and they know they will be impacted and are a bit skittish. Email readers, continue here.] The liquidity event and beyond' So you’ve found the buyer, received a letter of interest, signed it, and tied your company up for a period to complete the deal.

Due Diligence 85

Due Diligence Liquidity Event Intellectual Property SEC 85

Berkonomics

SEPTEMBER 24, 2015

While it is easy to divide all companies into just these two groups, this simplification ignores whether management has made a conscious, strategic choice about their growth. Email readers, continue here…] But this too is an overly simplistic view. This should be a major milestone goal of all start-ups.

Liquidity Event 48

Liquidity Event Ohio Acquisition Revenue 48

Startup Professionals Musings

FEBRUARY 3, 2010

The biggest mistake we see companies make is not realizing how much time is necessary to properly build and manage an advisory board before they get started. Most quality advisors know that chances of a liquidity event are rare. The best advice, if you are not ready to wholly commit to a professional, well-managed board – STOP.

Advisory Board 225

Advisory Board Startup Liquidity Event Stock 225

Berkonomics

SEPTEMBER 13, 2011

This is an exercise I perform with my boards no less than once every several years in planning exercises attended by the board and senior management, sometimes augmented with an industry consultant or expert from the outside. Use a white board visible to the entire group. And that is most rewarding to see.

Intellectual Property 67

Intellectual Property Liquidity Event Acquisition Distribution 67

Berkonomics

OCTOBER 29, 2015

Taking money from professional investors such as angels or VCs usually requires that you agree to seek an exit for those investors in your plan, often targeting five to seven years as the ideal period for growth before a liquidity event.

Liquidity Event 48

Liquidity Event Equity Venture Capital Stock 48

Berkonomics

FEBRUARY 23, 2023

Young companies have been known to outgrow the abilities of management to focus and direct them, failing to make the transition to organized, stable growth. Competitors, seeing a successful development of a niche, flock into the competitive void with products or services built with a fresh view of the current environment.

Dilution 62

Dilution Valuation Early Stage Equity 62

Berkonomics

JANUARY 6, 2022

The order of liquidation or payout. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. One tool often used: the “cutout” for management. Here’s an example that will make your heart skip a beat.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

Berkonomics

SEPTEMBER 8, 2022

Email readers, continue here.] For corporate boards, even those not looking for a buyer at this time, I often help to manage this exercise in board meetings once every few years. A wise board and management would take their own hint and strengthen that core, whether it is your development team, your geographic dominance or other trait.

Partner 62

Partner Intellectual Property .Net Distribution 62

Berkonomics

SEPTEMBER 27, 2018

Email readers, continue here…] I did forget to tell you that on that day looking into the company’s books I discovered that neither the company nor its founder had filed Federal income tax returns during the three years in business, didn’t I? The surprise I could not ignore. Our entrepreneur balked at the boldness of that statement.

Pre-Money Valuation 48

Pre-Money Valuation Sales Liquidity Event Valuation 48

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). composed of these investors and management. For you who fit that description, nice work.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Berkonomics

AUGUST 20, 2020

You’ve informed your top management of the pending but still secret deal and they know they will be impacted and are a bit skittish. Email readers, continue here…] First, should you inform your employees of the deal? Everyone on the board is anxious to close this. You’ve committed time to do whatever is needed.

Due Diligence 71

Due Diligence Intellectual Property SEC Lean 71

Berkonomics

MAY 26, 2010

Email readers continue here.] If these weekly nuggets are providing a bit of insight for you or your associates, then purchase a copy of BERKONOMICS in book form, with 101 of these insights organized from startup through liquidity event. One of the items on Cohen’s list of twenty five was stock options.

Employee 54

Employee Liquidity Event Stock Options Salary 54

Berkonomics

JANUARY 13, 2022

Email readers, continue here…] But what about the pause to celebrate? I often advise managers, CEOs and entrepreneurs always to part on a positive note and never burn the bridges of any past relationship. Then the money…. What most entrepreneurs fail dramatically at is to celebrate the moment.

Dilution 62

Dilution .Net Sales Entrepreneur 62

Berkonomics

JANUARY 27, 2010

Email readers continue here.] There are also clauses in many such investor documents that allow the investor to override the founder and force a sale of the company if a proposed sale is attractive to an investor for liquidity, even if the founder feels that there is much more potential if the business is not sold at the present time.

Liquidity Event 67

Liquidity Event Initial Public Offering Dividend Valuation 67

Rob Go

NOVEMBER 18, 2014

In the informal conversations during and leading up to the event, I noticed a bit of a sentiment that angel investing was somehow less appealing or less interesting than being an institutional VC. Invest in companies that may never have a liquidity event (VC’s need to get their money out within 10 years). 2: Flexibility.

Syndicate 66

Syndicate Syndication Due Diligence Liquidity Event 66

Berkonomics

JULY 26, 2010

As you follow these insights from ignition to liquidity event, you’ll detect a continuing theme, emphasizing the need for deep and wide relationships that the CEO and senior staff can call upon for advice and guidance. Email readers continue here.]

Balance Sheet 48

Balance Sheet Liquidity Event Government Restful 48

Berkonomics

NOVEMBER 8, 2018

Email readers, continue here…] So, if that day does come when you have sold the business or come into a financial windfall, I propose that there are few times in life when the opportunity opens to look outward, to participate in charity events, extended family vacations, community boards, and even coaching other entrepreneurs.

Community 48

Community Email Sales Liquidity Event 48

Berkonomics

FEBRUARY 9, 2017

Young companies have been known to outgrow the abilities of management to focus and direct them, failing to make the transition to organized, stable growth. Companies sometime run out of cash in the midst of success, and often find that sources of loans or investment are not freely flowing at the moment of need.

Dilution 48

Dilution Valuation Early Stage Naming 48

Berkonomics

OCTOBER 1, 2015

Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. That further reduces the amount available to founders if not still in the ranks of management. So this advice is directed to the investors.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Berkonomics

JUNE 17, 2011

You may be an architect or doctor or other professional managing your business, knowing that the end game value of your client or patient list is small and not easily transferred to any buyer without attrition. Email readers continue here.] What creates value in a business?

Equity 83

Equity Intellectual Property Revenue Community 83

Berkonomics

AUGUST 27, 2015

Many thought that they were starting companies for their children and grandchildren to inherit and manage. Email readers, continue here…] Now, when first meeting with an entrepreneur, I ask simply, “Is the business being formed as a Keeper or a Flipper?” What does all of this say about market levels and public attitudes?

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

Berkonomics

JANUARY 20, 2010

Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). For you who fit that description, nice work.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

Berkonomics

AUGUST 13, 2015

Dave’s note: John Huston is founder and past manager of the 300+ member Ohio TechAngel Funds and a past Chairman of both the Angel Capital Association and the Angel Resource Institute. . By John Huston. Many large companies have a preferred template from which their deal teams rarely stray.

Ohio 48

Ohio Acquisition Forecast Sales 48

Berkonomics

OCTOBER 28, 2011

Email readers, continue here.] I propose that there are few times in life when the opportunity opens to look only outward, to participate in charity events, extended family vacations, community boards and even coaching other entrepreneurs. How empowering. Maslov demonstrated it as well as can be done.

Community 66

Community Sales Email Entrepreneur 66

Berkonomics

OCTOBER 7, 2011

Managers almost always believe that stakeholders understand the pressures of the business and the circumstance of the present. . The truth is that many employees merely make a simple pact: timely pay for time in service.

Valuation 54

Valuation Dilution Down Round Employee 54

Berkonomics

OCTOBER 8, 2015

Email readers, continue here…] First there comes a sense of relief, knowing that you no longer need to worry over daily cash or threats to your net worth. I often advise managers, CEOs and entrepreneurs always to part on a positive note and never burn the bridges of any past relationship.

Entrepreneur 48

Entrepreneur Dilution .Net Sales 48