Berkonomics

FEBRUARY 3, 2022

First, the implied promise: 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. What if you later decide to just keep control?

Liquidity Event 62

Liquidity Event Preferred Stock Dividend Equity 62

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. There is a lot to say about retaining control.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Berkonomics

AUGUST 27, 2020

Email readers, continue here…] But maintaining such an electronic or physical facility is time-consuming and costly. The question is whether to start this exhausting process early in the life of a corporation, or rush to complete it when a deal is identified or the run to a sale is imminent. When to start a data room?

Software Review 62

Software Review Due Diligence Intellectual Property IPO 62

Berkonomics

APRIL 20, 2023

The Angel Capital Association recently published a study contributed to by several of my friends quoting that seventy percent of investments made by angel investors to date return less than the amount invested – upon a sale or closing of the business – the great majority of these outright losses as businesses die. What does THAT mean?

SBA 62

SBA Angel Investor Early Stage Liquidity Event 62

Berkonomics

FEBRUARY 23, 2017

Email readers, continue here…] But this question begs for a positive answer. If you own a significant piece of the business, is this a time to consider planning an eventual exit or liquidity event? How would you like to see your finish line? Or do you plan to pass control to the next generation if appropriate?

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. Not only will group focus upon the possibility of a liquidity event, it will begin to focus upon a number of possible buyers. So, that’s the reason for this insight.

Liquidity Event 48

Liquidity Event Intellectual Property Naming Acquisition 48

Berkonomics

JUNE 12, 2014

Email readers, continue here.] So co-management is the second group to share in the bounty upon a liquidity event. Investments in small companies involve a much greater degree of risk than investment in public companies, which provide immediate liquidity if needed and a ready measure of value at any time.

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

Berkonomics

JUNE 15, 2017

From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering. So be aware that professional investors are in your company for the eventual large profits at the liquidity event.

Liquidity Event 97

Liquidity Event Initial Public Offering Dividend Valuation 97

Berkonomics

NOVEMBER 15, 2018

Email readers, continue here…] I found one of my joys in angel investing, putting money to work by investing time and money into promising young entrepreneurs much like I once was, coaching them, putting them together with others who have needed skills, helping to build someone else’s dream. The rewards of angel investing.

Liquidity Event 48

Liquidity Event Early Stage Government Leadership 48

Berkonomics

OCTOBER 4, 2018

I cannot recall ever attending a closing dinner for a sale in which we returned only a portion of the investor group’s money. In fact, I don’t recall any formal post-sale meeting at all; even to digest the lessons learned from the entire experience, a missed opportunity for all. Sometimes, there is embarrassment or shame.

Sales 54

Sales Investment Bankers Initial Public Offering Early Stage 54

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. I found myself in such a situation upon a sale of my computer software company. And a lack of plans for others.

Stock Options 192

Stock Options Stock Distribution Programming 192

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.

Pre-Money Valuation 48

Pre-Money Valuation Sales Liquidity Event Valuation 48

Berkonomics

MARCH 9, 2017

The Angel Resource Institute (ARI) recently published a study conducted by well-respected Rob Wiltbank, quoting that seventy percent of investments made by angel investors to date return less than the amount invested – upon a sale or closing of the business – the great majority of these outright losses as businesses die. And, the U.S.

Angel Investor 106

Angel Investor Angel Groups Liquidity Event Early Stage 106

Berkonomics

AUGUST 20, 2015

The inciting incident in a movie is the event at the beginning of the story that causes the hero’s life to be completely transformed and irrevocably changed, and makes the whole story unfold. I thought of this in a recent liquidity event in one of my portfolio companies.

Liquidity Event 48

Liquidity Event Private Equity Valuation Equity 48

Berkonomics

SEPTEMBER 24, 2015

For high growth ventures being groomed for a lucrative liquidity event, this is usually a wise choice, presuming additional growth capital can be successfully raised on agreeable terms. 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

Berkonomics

AUGUST 29, 2013

Sometimes the end game or sale of the company is not a happy event. Especially when outside investors, venture capitalists, or angels, have put in substantial money and the sales price is less than the value of their investment. There are a number of questions a distressed sale brings to mind.

Delaware 66

Delaware Liquidation Preference Liquidity Event Preferred Stock 66

Berkonomics

SEPTEMBER 17, 2011

email readers continue here.] Did I 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? There are natural high points in one or both that may not be obvious until looking back.

Liquidity Event 59

Liquidity Event Pre-Money Valuation Sales Valuation 59

Berkonomics

JUNE 2, 2010

Email readers continue here.] I know from my own experience that no matter how good you think you are at company-building, it is those who surround you with talent that make the difference and add extraordinary value to create an eventual liquidity event.

Liquidity Event 86

Liquidity Event Stock Options IPO Stock 86

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. For some, that comfort is worth forgoing building high equity value.

Liquidity Event 48

Liquidity Event Equity Venture Capital Stock 48

Berkonomics

DECEMBER 17, 2020

Email readers, continue here… ] The Angel Capital Association (ACA) lists over four hundred member groups, located throughout the USA. There is a rather new term for those large, individual investors who are usually former entrepreneurs made rich through sale of their previous ventures. How many angel groups are there?

Equity 62

Equity Finance Liquidity Event Angel Groups 62

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. This makes for some head-rubbing when attempting to calculate the return on investment with a proposed sale. and there are those accumulated dividends. …and

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

Berkonomics

SEPTEMBER 13, 2011

And finally, have the group put a number in column four, estimating the likelihood of such a sale ever being consummated, with “10” the absolute highest and “1” unlikely to occur. Email readers continue here.] The magic of this exercise is not only in the organization of group focus upon the liquidity event and possible buyers.

Intellectual Property 67

Intellectual Property Liquidity Event Acquisition Distribution 67

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). For you who fit that description, nice work. There is a lot to say about retaining control.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Berkonomics

FEBRUARY 23, 2023

Email readers, continue here…] Think of major companies, public and private, that have lost their shiny appeal over time, including Zinga, LivingSocial and Fisker in this generation – and Alta Vista in the last. Not so long ago, Basil Peters wrote his book, “Early Exits,” after analyzing 150 young companies and their exits.

Dilution 62

Dilution Valuation Early Stage Equity 62

Berkonomics

SEPTEMBER 8, 2022

Email readers, continue here.] Some potential buyers or strategic partners might want your intellectual property, or revenues, or profitability, geographic advantage, or sale force, or your employee base. You can list companies you know, have contacts within, or that fit your industry segment. Examine the four columns in the matrix.

Partner 62

Partner Intellectual Property .Net Distribution 62

Berkonomics

JULY 23, 2020

Sometimes the end game or sale of the company is not a happy event. Especially when outside investors, venture capitalists, or angels, have put in substantial money and the sales price is less than the value of their investment. There are some questions a distressed sale brings to mind. How about outside investors?

Delaware 62

Delaware Liquidation Preference Preferred Stock Early Stage 62

Berkonomics

JANUARY 13, 2022

Email readers, continue here…] But what about the pause to celebrate? Not many founders or entrepreneurs do experience the success of a favorable sale of the business they dreamed would make them rich. Others are diluted by subsequent investors to the point where there was nothing for them to celebrate at all in a sale.

Dilution 62

Dilution .Net Sales Entrepreneur 62

Berkonomics

DECEMBER 30, 2021

Email readers, continue here…] We who invest look for patterns from previous experience. It would not be handling the expensive hardware that is part of its required sale at all, other than to recommend alternatives and charge for coordinating the purchases of differing supplier products, oversee the installation.

Bankruptcy 62

Bankruptcy Early Stage Matching Software 62

Berkonomics

JANUARY 27, 2010

From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering. So be aware that professional investors are in your company for the eventual large profits at the liquidity event.

Liquidity Event 67

Liquidity Event Initial Public Offering Dividend Valuation 67

Berkonomics

JANUARY 31, 2019

And because there was consideration paid to you in the sale, that clause is binding upon you and is effective almost everywhere. Email readers, continue here…] How about after the two-year limitation in your non-compete agreement? Now we add complexity to the issue: bankruptcy of the buyer. After the non-compete expires.

Non-Compete 48

Non-Compete Bankruptcy Sales Employee 48

Berkonomics

JANUARY 31, 2019

And because there was consideration paid to you in the sale, that clause is binding upon you and is effective almost everywhere. Email readers, continue here…] How about after the two-year limitation in your non-compete agreement? Now we add complexity to the issue: bankruptcy of the buyer. After the non-compete expires.

Non-Compete 48

Non-Compete Bankruptcy Sales Employee 48

Berkonomics

SEPTEMBER 6, 2018

The question to study in your board meeting long before making any offer to purchase a candidate business is: “Would this acquisition add significantly to our enterprise value and attractiveness in an eventual sale?”. Email readers, continue here…] Many companies find acquisitions to be a decision of “make or buy.”

Acquisition 48

Acquisition Distribution Channel Operations 48

Berkonomics

NOVEMBER 8, 2018

If you have now passed through the mind-numbing process of a successful sale of your company and the money is in the bank, enough to satisfy your needs, if not much more, then you have arrived at the point where you can think about love, belonging, esteem and self-actualization.

Community 48

Community Email Sales Liquidity Event 48

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. 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.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Berkonomics

AUGUST 13, 2015

If you have professional angels or venture capitalists among your funding sources, you have probably been focused on your company’s sale well before they wrote their first checks. Cash spent on activities which do not burnish your attractiveness is cash squandered as you prepare for the sale. That premium is your focus.

Ohio 48

Ohio Acquisition Forecast Sales 48

Berkonomics

FEBRUARY 9, 2017

Email readers, continue here…] For young companies, often the question is whether to suffer a new round of dilution to stimulate growth, or to sell earlier and not share the (presumably) increased proceeds with additional investors.

Dilution 48

Dilution Valuation Early Stage Naming 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. There is a lot to say about retaining control.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69