Financing Acquisitions: Keys to Structuring the Deal And Obtaining The Funding

YoungUpstarts

Think of financing an acquisition as an exercise with two parts that work in concert: 1) structuring a desired deal with a suitable target and 2) obtaining the funding. Structuring the Desired Deal. Of course, no deal goes down without funding. by Kenneth H.

Startup Blog: Take a Stand!

Taffy Williams

It may be around deal structure, testing or design of product, new hires, downsizing or firing, how much to spend on a program or some other issue. The deal terms are ones you as the CEO, entrepreneur, or employee know will cause great stress and even the possible demise of the company.

Knowledge Is Power: Convertible Note Financing Terms, Part V

Gust

As we conclude our convertible note financing series, there are assorted terms commonly seen in term sheets and deal documents that are worth touching on briefly. This is the norm for West Coast deals, but it’s often the case in dealing with East Coast investors (more commonly for VC financing rounds rather than angel seed rounds) that the lead investor wants its lawyers to draft the documents.

Knowledge Is Power: Convertible Note Financing Terms, Part II

Gust

Last week , we gave some attention to the “why” behind convertible note financing for early stage startups. In this installment, I’ll dig into the “how” by dissecting an example term sheet based on a real deal. As with so many subjects in law and finance, mastering the jargon is half the battle. This may seem like a no-brainer now that you understand the basic structure of a convertible debt financing. Amount of Financing : Up to $600,000 may be issued.

Knowledge Is Power: Convertible Note Financing Terms, Part IV

Gust

To account for scenarios in which the startup is acquired before it has a chance to complete a priced equity financing round, most term sheets and deal documents contain a “ change in control ” provision. Suppose the notes converted as if the acquisition were an eligible financing round. Invested Interests angel investment deal terms fundraising startups venture capital

Finding Investors is highly dependent on your ability to network

Taffy Williams

The investment made by each will depend on their financial capacity, internal limits of the finances for each investment, and their comfort with the company. The deal structures will vary significantly dependent on their experience investing in early stage companies.

How to value your company for sale (Part 2)

A Smart Bear: Startups and Marketing for Geeks

Remember how the buyer has his own way of valuing the deal ? You’re skipping a step — trying to decide if the deal is even plausible — but how can you decide that if all you’re doing is thinking about the other side? Do you prefer Deal B?

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Dialing for Dollars

Taffy Williams

One greatway to get non-dilutive financing is by partnering a product you may not wishto develop or sell yourself. Having a business advisorand a great corporate counsel is important to the final deals structure. One local VC indicated they review more than 600 deals per year andinvest in around 6. entrepreneur investor Startup financingAs statedbefore, your startup will have little or no money for the first severalmonths.

Keep Term Sheets Simple for Quicker Cash to Spend

Gust

Remember a term sheet agreement is not a deal until the check clears. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists.

How VCs Think About Adding New Partners

Both Sides of the Table

Kara has worked in finance in Boston, NYC and Silicon Valley. In Kara’s case I got to see her work on deal structuring first hand having worked closely with her on her board at P.S. XO. Let me start with the news that I’m excited to share with you.

Keep Term Sheets Simple for Quicker Cash to Spend

Startup Professionals Musings

Remember a term sheet agreement is not a deal until the check clears. It’s true that Angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists.

A Primer on Angel Investment ‘Simple Term Sheets’

Startup Professionals Musings

Remember a term sheet agreement is not a deal until the check clears. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists.

Agile success generates great feelings

Taffy Williams

The deal structures for the financing may follow the same pattern of making you feel ill or bringing a huge smile. Finding partners and getting deals completed can be a huge energy consuming effort. Yes, it is a bit like THIS!

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When Should Startup Founders Discuss Valuation with Seed VCs?

View from Seed

Sharing these pricing expectations early with potential lead investors fundamentally qualifies your conversations, but it also runs the risk of prematurely losing a potential financing partner, or else it can reduce options to maximize your fundraise outcome.

Clean Deal Terms

David Lee

He said one thing there that I agree with 100%, among others: I have an allergic reaction to complex deal structures, as they invariably end up with all sorts of unintended consequences. Lately I’ve seen more complex “deal terms” in early stage financings. ” This basically says that an early investor gets the right to invest not only their pro-rata in a next round of financing but X% more.

Later-stage rounds and “setting the bar too high”

Chris Dixon

Here is what the payout function looks like for common stock (for example, what you get when you buy stocks in public markets): And here is what the payout function looks like for preferred shares: So, to take a concrete example, Dropbox reportedly raised their last financing at a $4B valuation*.

The 10 Best Real Estate Schools Compared: Meet the Winner!

Blogtrepreneur | Entrepreneur Blog

A real estate school will help potential residental and commercial real estate agents , brokers and realtors understand the world of finance as well to acquire the necessary skills of negotiation and valuation required to be successful in the field.

Both sides must be fair in a term sheet negotiation.

Berkonomics

Just a few of these terms include vesting, corporate structure, governance principles, financing strategy, valuation and exit strategy. As an example, twenty five years ago, most VCs used common share deal structures. By Basil Peters.

Notes on the acquisition process

Chris Dixon

Ten years ago, startups financing was an insider’s game. Moreover, some public companies insist that you don’t talk to employees until the deal is closed or almost closed. As with financings, acquisitions take a long time and involve lots of meetings and difficult decisions. Just as with financings , you need to be opportunistic. Some even go so far as to try to cut side deals with key employees to entice them to abandon the other employees and investors.

That convert you raised last year is a part of your cap table

Seth Levine's VC Adventure

When it comes to convertible debt, I’ve had a few instances recently where “out of sight, out of mind” has created some misunderstandings around deal structures. Given the prevalence of convertible debt as a seed financing instrument, an increasing number of companies we look at have some kind of convert in place. Not necessarily a bad deal, but if you didn’t have that in your head you’re setting yourself up for a big surprise.

Signaling Pricing Expectations Early in Seed Investment Discussions

Genuine VC

As more transparency to seed-round funding transaction details have emerged, especially with the advent of Angelist and accelerator programs (which both educate and even sometimes set terms & structure for graduating companies), I’ve noticed an increasing number of entrepreneurs signal pricing expectations much earlier in the seed fundraising process. Setting a structure and price in advance can also expedite the negotiation process, especially when it’s with multiple parties.

That convert you raised last year is a part of your cap table

Seth Levine's VC Adventure

When it comes to convertible debt, I’ve had a few instances recently where “out of sight, out of mind” has created some misunderstandings around deal structures. Given the prevalence of convertible debt as a seed financing instrument, an increasing number of companies we look at have some kind of convert in place. Not necessarily a bad deal, but if you didn’t have that in your head you’re setting yourself up for a big surprise.

in search of.the ideal term sheet

Seed Stage Capital

For any large deal, they will convert and be treated like the founders and employees. VCs really need to move to a deal structure that doesn’t burn up so much lawyer time negotiating provisions that are almost never used.

What Entrepreneurs Should do about Price Fixing

Both Sides of the Table

Asked to respond to the topic, “What collusion happens with AngelList, if any&# I wrote the following: “Um, let’s not be naive here and not think that a “form of collusion&# doesn’t happen on virtually any financing round. How well financed is the competition?

'Show Me the Money' Tips for Business Sellers

Inc Startups

Roger Murphy, president and CEO, Murphy Business & Financial During your first meeting, get a solid idea of how your broker qualifies buyers and whether he or she works with buyers to seek financing. Do you need all cash at closing, or can you handle owner financing?

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allensblog: "Fully-Diluted"

Allen's Blog

In a deal recently, the term sheet offered by the prospective investor contained a reference to the term: "fully-diluted" The company accepted the term sheet and the lawyers drafted the documents. On review by the Company, however, it became clear that the parties had different interpretations of "fully-diluted" Due to some idiosyncracies of the company's capital structure, the disagreement had a significant impact on the deal structure.

Why Selling Your Company is Like Dancing With the Stars

Inc Startups

While it may look simple, one misstep could easily cost a business owner millions of dollars or scuttle the deal altogether. Like dancing, it may look simple, but you need assistance from a pro to maximize the value of your company, close the deal and end up a winner.

Build Your Startup on a Vacant Domain Name

David Teten

That’s why our portfolio company Plated.com decided to structure a lease option – they offered the prior owner a small monthly lease fee for 1 year, with an option to buy at the end of the year. Another route is to approach a lender like Domain Capital that is familiar with the industry and will finance the domain at rates far better than traditional financing. There is no standard template for a deal with a domain name owner.

Build Your Startup on a Vacant Domain Name

David Teten

That’s why our portfolio company Plated.com decided to structure a lease option – they offered the prior owner a small monthly lease fee for 1 year, with an option to buy at the end of the year. Another route is to approach a lender like Domain Capital that is familiar with the industry and will finance the domain at rates far better than traditional financing. There is no standard template for a deal with a domain name owner.

The downside of high valuations

StartupCFO

When it comes to deal structuring, the higher you push the valuation, the more “protections&# investors will build in. As I was looking through Fenwick & West’s Q3 Silicon Valley VC survey , there are clear signs that these protections are making their way into the deals that are getting done: - 20% of deals had multiple liquidation preferences. 53% of deals had participating prefs.

Angel Investing is Where VC was 25 Years Ago

Angel Blog

As I attended sessions, and had conversations, on everything from deal structures to term sheets and deal flow to exits, it occurred to me that I had been in similar conferences about 25 years ago. When I was a young entrepreneur, part of our plan was to finance our growth with venture capital. The angel investment ‘industry’ today is at about the same stage of development as the venture capital industry was in the mid 1980’s.

Startup Blog: 7 Questions You May Get from Potential Investors

Taffy Williams

This can happen based on a great deal with a partner, positive data from proof-of-concept, a major advancement in development, or other such value creating events. If you are dealing with a lead investor, they usually go by the “golden rule; I got the gold I set the rules.&#

A Summary of Current Trends in Canadian Mergers and Acquisitions - 2011

Recent Buzzes - VC Experts, Inc.

With keen international interest in Canada's resource sector, the return of financial buyers, strategic investors looking to pursue acquisitions as a means of increasing earnings, and the recent uptick in Canadian "mega-deal" activity, there is no better time to discuss the M&A trends unfolding in 2011. Canadian investors' newly acquired interest in high-yield bond issuances will provide strategic buyers with an additional source of financing. HOSTILE DEALS.

Goldman Sachs / SEC: political witch-hunting is no way to change a market

Fred Destin

Reading the allegations against Goldman Sachs and Fabrice Tourre in the case of structured CDO scandal (aka Abacus), I am reminded of Spitzer and how a General Attorney used a witch-hunt as a political tool, only to be later exposed himself in the company of barely clad ladies.

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Why Leave A Six Figure Corporate Job For Internet Entrepreneurship?

Entrepreneurs-Journey.com by Yaro Starak

Professionally, I am a Certified Public Accountant (CPA), may also be called a Chartered Accountant (CA) on your side of the globe, a Finance Charter-holder and a Certified Financial Planner. I travelled all over the world wherever business deals were happening, gained tremendous experience and exposure to the Corporate landscape, and learned invaluable life lessons in my career. I understand personal finance.

Cracking The Code: The Bessemer 10 laws of SaaS - Fall 2008.

Cracking the Code

A simple example would be if Customer A signs a one-year deal at $10,000 per month, and Customer B signs a three-year deal at $5,000 per month. Together, CMRR, Cashflow, Churn, CAC, and CLTV make up the “5 C’s of SaaS Finance. Yahoo Finance. Cracking The Code.