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Covenant Related Topics 
Berkonomics
DECEMBER 12, 2019
As loan covenants become closer to being violated or after such an event, bankers have some latitude in deciding how to handle their accounts. The warning is real. You’ve heard the old one – that a banker always seems willing to offer a loan when you don’t need it.
Early Growth Financial Services
JUNE 19, 2014
1) Hiring — There are 3 main areas of risk here: restrictive covenants, compensation arrangements, and confidential information. Restrictive covenants — Employers often use non compete and non solicitation clauses to retain employees. Why worry about employment law risks when you have enough things to focus on: building your team, getting traction, and lining up funding? Well, as the adage goes, “an ounce of prevention is worth a pound of cure.”
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Feld Thoughts
MARCH 29, 2019
My favorite moment of the trip was when someone asked me if I was running the Covenant or the Barkley. Sunday is the Knoxville Marathon. My plan was to run it, collect the finisher medal that has become part of the marathon ritual, eat whatever I wanted for dinner on Sunday night, and head home Monday morning. Amy and I are heading home today. While some aspects of our week in Knoxville have been good, I came down with a nasty cold early in the week.
Berkonomics
JULY 16, 2020
Read the loan covenants carefully. Then there is the loan audit fee, often more than $4,000 a year, to pay for the lender’s auditor to make sure the collateral and company are compliant with the covenants of the loan. Catching up from past insights.
Berkonomics
DECEMBER 21, 2017
The combination of restrictive covenants in the investor documents and the new dynamic of board members with an agenda make for a change in the culture of the corporation, certainly one for the CEO. Close. Let’s talk about the reality of taking money from professional investors. It is not the first time we’ve covered this general subject nor the last. But this time, we concentrate upon governance changes.
Up and Running
MAY 21, 2015
Covenants. Covenants, a legal term that just means promises, are things you promise to do (known as affirmative covenants ) or promise not to do (known as negative covenants ) as the manager of the business. Outside investors want covenants in the agreement as part of their investment because they’re entrusting you to take their investment and run the business in a proper way, without actually being there to check on you on a daily basis.
Berkonomics
JANUARY 24, 2013
As loan covenants become closer to being violated or after such an event, bankers have some latitude in deciding how to handle their accounts. In the gray area where covenants are broken but barely, covenants can be waived for a period of time as companies rectify the problems, all based upon the quality of the relationship between banker and client. You’ve heard the old one – that a banker always seems willing to offer a loan when you don’t need it.
Berkonomics
FEBRUARY 8, 2018
We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations. Close. This statement could be considered controversial. Now we explore the other side of that coin. Professional investors usually bring “smart money” to the table, defined as money that comes along with good advice and great relationships for corporate growth.
Up and Running
NOVEMBER 25, 2020
Post-termination covenants. In addition to the possibility of facing liability for “lost future royalties” as discussed above, as a prospective franchisee, it is important to be aware of any other post-termination covenants in your franchise agreement as well.
Feld Thoughts
JANUARY 1, 2019
I’ve signed up for the 2019 Cowtown Marathon (Fort Worth) in February and the Covenant Health Knoxville Marathon (Knoxville) at the end of March. Three of my colleagues at USV have first day of the new year posts up this morning that inspired me. Two are macro-related (Fred’s and Albert’s) but one is personal (Bethany’s). Take a look at all three – they are a good way to get ready for what is to come.
Austin Startup
DECEMBER 7, 2017
To solve this, VCs and entrepreneurs need a quick and easy way to provide seed funding, without a long, drawn out negotiation, onerous debt covenants, or a crazy valuation that could hurt the investor and/or the entrepreneur. Unlike debt, the SAFE note does not come with onerous restrictions and covenants that risk insolvency, induce regulations, force interest payments, complicate subordination agreements, etc.
Berkonomics
JANUARY 4, 2018
And none of this is especially considered a trade secret, violating the unspoken covenant between competitor CEOs that there is a limit to such exchanges. Close. Many of us belong to industry associations and find ourselves at conferences and trade shows with time to spend with competitors. Some of these are old friends; some even former associates. It is natural to want to associate with these people for many reasons, certainly socially.
Up and Running
SEPTEMBER 26, 2016
Covenants: borrowers face fewer operational restrictions or covenants with venture debt. Accounts receivable loans will typically include some minimum profitability or cash flow covenants. For startups and high-growth businesses, as you scale and encounter new milestones and obstacles, you will be faced with the question of how to finance and plan for that growth.
YoungUpstarts
SEPTEMBER 20, 2013
You would need sound legal advice from an attorney to ensure that you avoid nasty covenants in the lease. by Melissa Page. If you’re running a small business, you need to be on top of legal basics to make your business successful. To make sure you don’t encounter any nasty surprises, here are the common legal issues behind running a small business you should be familiar with: Contracts. A business operation entails many transactions and agreements that should be recorded in written form.
YoungUpstarts
AUGUST 19, 2019
Therefore, you need to, first of all, familiarize yourself with such terms as default, loan-to-value ratio, financial covenants, balloon payment, and personal guarantee among many others. It comes as no surprise that it is quite impossible to start a business or develop the already existing one without sufficient funding. It is also not easy to obtain a loan for business. Nevertheless, requesting a loan remains a very important task for a startup entrepreneur or any other business owner.
Feld Thoughts
JANUARY 25, 2011
Following is my current schedule: April 3 – Knoxville, TN – Covenant Health Marathon. I’ve now put together eight great weeks of running in a row. On Sunday, I finally had a long run to town (from Eldorado Springs to Boulder). This has been a long tradition of mine and Amy’s – I run to town early in the morning and she drives in later, we have brunch with friends, and then get massages in the afternoons.
David Teten
SEPTEMBER 10, 2019
Structuring and Negotiating Executive Compensation Packages: Addressing Pay, Severance, Restrictive Covenants, and More. “The board has met and we’d like to extend you an offer to join the company. We’ll send you all the details via email. We are excited to have you join us!” ” If you get that phone call, what should you be thinking about? I compiled the best resources I found here.
YoungUpstarts
JUNE 28, 2017
Restrictive covenants to prevent the seller opening up in immediate competition. At some point in most people’s lives, the temptation to start their own business dangles before them like the proverbial golden apple. After all, working your own hours, being your own boss and (best of all) the unlimited earning potential, can be a tempting combination.
David Teten
AUGUST 1, 2019
Structuring and Negotiating Executive Compensation Packages: Addressing Pay, Severance, Restrictive Covenants, and More. “The board has met and we’d like to extend you an offer to join the company. We’ll send you all the details via email. We are excited to have you join us!” ” If you get that phone call, what should you be thinking about? I compiled the best resources I found here: Due Diligence as a Team Member. Ready to join a new management team?
The Equity Kicker
JULY 15, 2014
Daniel likes to give the following example: SMEs use lawyers a lot to review employment contracts, but the cost of doing so can vary from £300 to £1,400 depending on the complexity of the situation (options, founder status, restrictive covenants etc.). We recently invested in Lexoo , a marketplace connecting SMEs with legal services.
YoungUpstarts
FEBRUARY 19, 2016
Given the challenges and limitations of non-compete agreements, there are other, less severe restrictive covenants and agreements that may be used as alternatives or supplements to non-compete agreements. By Mike Freed , attorney at Gunster. Three of the most valuable assets of businesses are trade secrets, customer relationships and employees. Non-compete agreements can be an effective tool to protect these assets.
YoungUpstarts
FEBRUARY 10, 2016
Housing laws are also covered by different legal covenants, and vary by property type. Image credit: Real estate from Shutterstock. Whether you’ve only been in the real estate business for a short time or you’ve grown to a medium sized enterprise, this industry can chew you up and spit you out. On the other hand, it can also yield great returns if you know what you’re doing.
YoungUpstarts
MARCH 14, 2012
EBITDA is often used in loans covenants. Business can be a dirty business. And the language of business can be hard to understand. For beginners in the field (or the more analog of the bunch), business acronyms old and new can confuse and ultimately disappoint if not correctly understood. The more market-savvy professionals already know some of these standard shortened phrases, and business glossaries abound.
Berkonomics
AUGUST 21, 2013
Loan covenants are always required that clearly state how much net equity, the minimum current ratio, and other minimum financial requirements must be maintained to be compliant, and state the penalties for non-compliance – which are always severe, often threatening to call or cancel the loan in its entirety. Growing companies usually require more working capital during their periods of rapid growth.
Both Sides of the Table
MARCH 18, 2010
He had a pile of debt and covenants that made him vulnerable if the debt holders wanted to play rough. Today we announced Launchpad LA V2. Full press release with more details is here. We will be selecting 10 startup companies to participate. There is no cost but you must physically be based in or move to Los Angeles for the 6 months of the program. Applications are due April 6th, 2010, the form is on the website and the Twitter address is @launchpadlad.
NZ Entrepreneur
FEBRUARY 17, 2019
Breaching facility limits and covenants – this can take the form of a company breaching its overdraft facilities with multiple excesses each month. Christmas is long gone and the short weeks caused by public holidays are behind us until April. Before you plan the rest of your year, it’s time to take stock and look at conducting this ever-important “annual health check” on your business. The current New Zealand economic climate is buoyant and businesses are well positioned for growth.
David Teten
JANUARY 19, 2021
Typically promissory note or non-voting common stock, with covenants. Hard covenants with potentially strict penalties. . (co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. His work on VC and small communities can be found at greatercolorado.vc/blog.
Lightspeed Venture Partners
DECEMBER 10, 2012
Banks often have operating covenants for their loans that require the company to be hitting plan, or close to it. These firms typically charge more than banks and have higher warrant coverage, but have fewer restrictions on the use of capital, no covenants, and will often lend more than a bank will. Although Sharktank has been running reruns on Fridays the last few weeks, the show ran a Sharktank 2012 Holiday special on Tuesday night.
Berkonomics
JULY 19, 2010
The combination of restrictive covenants in the investor documents and the new dynamic of board members with an agenda make for a change in the culture of the corporation, certainly one for the CEO. However, outside professional investor board members can be a very good asset to the corporation with the skills, experience and broad relationships many bring to the boardroom table.
Both Sides of the Table
APRIL 19, 2011
He tells the story of how he was out of cash, stressed out, nobody in LA or Silicon Valley would give him money, he had finally found an investor in Minneapolis but his venture bank was going to shut him down for breaking a “covenant&# in their agreement by not having enough cash in the bank. I recently sat down with Matt Coffin , the founder of LowerMyBills, which sold for $400 million but was very nearly a bankruptcy only a few years early, and talked “startups.&#.
Up and Running
APRIL 2, 2015
Most commercial loan include what we call loan covenants, in which the company agrees to keep some key ratios —quick ratio, current ratio, debt to equity, for example—within certain defined limits. That bank loan you want for your company? Well, the bank is going to want a lot before they give it to you. Do you find this daunting? Me too.
Both Sides of the Table
SEPTEMBER 28, 2014
Many venture debt lines have “covenants” that restrict you from going below a certain amount of cash in the bank (in normal times they are more common – in better times they are less common). I was reading Danielle Morrill’s blog post today on whether one’s “ Startup Burn Rate is Normal. ” I highly recommend reading it.
Berkonomics
FEBRUARY 9, 2010
We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations. This statement could be considered controversial. Now we explore the other side of that coin. Professional investors usually bring “smart money” to the table, defined as money that comes along with good advice and great relationships for corporate growth.
Up and Running
AUGUST 6, 2014
Since asset-based loans don’t rely on the borrower’s operating performance, but on the quality of the collateral, fewer financial covenants are required of the borrower, and as compared with traditional bank lending, ABL lenders typically require a much more limited degree of reporting back to the lender.
YoungUpstarts
JUNE 19, 2018
Pensacola used a Covenant for the Community to guarantee that contractors would use local minorities in the revitalization of downtown. by Quint Studer, author of “ Building A Vibrant Community: How Citizen-Powered Change Is Reshaping America “ America’s small towns are doing really big things. They’re bypassing traditional methods and finding innovative ways to revitalize. And by and large, they’re doing so under the radar of the national media.
Berkonomics
SEPTEMBER 13, 2010
Bank loans with restrictive covenants are taken on. Start-ups with one founder rarely have or need a board of directors. In fact, such a board would seem out of place in a one person company. As soon as any outside money is ingested into the corporation, others have a vested and legal interest in the behavior of officers entrusted with the best use of funds.
Pascal's View
JULY 9, 2017
The easiest way to do so is via SAFE notes, due to their simplicity, “available online” documentation, no major covenants established to protect the investors, no governance implications at the board level, etc. Andrew Krowne and I recently co-wrote an article in Tech Crunch , Why SAFE Notes Are Not Safe for Entrepreneurs.
Up and Running
APRIL 8, 2013
The biggest downside to traditional debt is that it is harder to qualify for, especially in today’s post-financial crisis environment, often requiring at least two years of consistent profitability and going forward the company must maintain and abide by strict financial ratios and covenants. Cash is the lifeblood of every business.
David Teten
AUGUST 19, 2019
Like other RBI firms, Decathlon does not require warrants, governance involvement, or the types of financial covenants that are often associated with other venture debt type solutions. Additionally, Feenix typically needs fewer financial covenants and can provide quicker turnaround for due diligence with the benefit of transparency they receive by tracking credit card sales activity. So you’re interested in raising capital from a Revenue-Based Investor VC.
Pascal's View
DECEMBER 17, 2012
It is critical to know the state of the art in merger terms leading to an acquisition and in post-merger covenants, particularly with respect to the release of cash consideration held in escrow or as a holdback by the buyer. Denis Dougherty of Intersouth Partners was recently interviewed by Brian Gormley of The Wall Street Journal on the decade-long liquidity crisis that continues to plague the venture capital industry.
crowdSPRING Blog
SEPTEMBER 20, 2016
In years prior, each season came with a subtitle that indicated what theme the anthology would follow in the episodes to come, including “Coven,” “Freak Show,” and “Hotel.” You might not be an American Horror Story fan. I wouldn’t blame you. The extravagant horror anthology from Ryan Murphy is at turns decadent, grotesque, and terrifying, and that’s not for everyone.
Berkonomics
AUGUST 2, 2010
And none of this is especially considered a trade secret, violating the unspoken covenant between competitor CEOs that there is a limit to such exchanges. Many of us belong to industry associations and find ourselves at conferences and trade shows with time to spend with competitors. Some of these are old friends; some even former associates. It is natural to want to associate with these people for many reasons, certainly socially.
Tim Keane
MARCH 9, 2011
Appropriate covenants. Appropriate covenants. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Leaving a Trail | Main. | How to prepare a sales forecast for a business plan » March 09, 2011. How should I finance my new venture? It’s a deceptively simple question: what is the optimal way to finance a new startup?
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