Many people start companies because they are passionate about their idea, product, or vision. Investors love to see that passion in a founder, but they are obviously wanting a return on their investment. This is where exit strategies come into play, sometimes referred to as a liquidity event. You could lump things like a dividend…
Category Archives: Business Transactions Blog
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Valuation
Common models used to value a company, how these apply to startups, stock valuation, stock option valuation, and comparisons with US GAAP accounting valuation. Common Company Valuation Methods Market Capitalization Most people are familiar with terms like “market cap” if they have any interest in publicly traded stocks. Market capitalization is a method that can…
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Private Placement Memorandum
So what exactly is a private placement memorandum (PPM) and why do I need one? What is a PPM? A private placement memorandum is an offering document, sometimes called a prospectus, offering circular, or PPM. The majority of early startups and emerging growth companies commonly raise money through what are known as private placements. It…
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What You Need to Know About Online Contracts
Here are some of the specific issues faced by SaaS, cloud computing, social networking, and other online service companies. Online E-contracts One of the common questions in dealing with tech companies deals with legal and contractual questions when you don’t have an actual customer sitting in your office that you make a deal and sign…
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The Due-On-Sale Clause: What It Is And When To Ignore It
A Due-On-Sale Clause can be found in most contemporary mortgage instruments and, as the name suggests, states that the mortgage debt will become due upon sale of the property. From a lender’s perspective the logic is fairly straightforward – security for the loan is put at risk when the collateral property is owned by a…
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Capitalization, Cap Table, & Initial Accounting
This article will serve as an explanation of some of the basics around the formation and structure of a corporation. I am using examples for a typical corporation, but many of the concepts can apply to LLCs and the issuance of units to represent membership interests instead of stock. I) Capitalization People need to have…
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Introduction To Easements
An easement is, simply put, a right to enter or otherwise use someone else’s land for a specified purpose. Stated another way, but with slightly more pretention for effect; an easement is a nonpossessory right to use and/or enter onto the real property of another without possessing it. As you might imagine, merely labeling something…
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Guide to Business Entities
Businesses can be categorized by law in several manners. And these classifications matter when it comes to determining how a business is recognized, how it’s taxed, and the personal liability, or lack thereof, of the business owners. Knowing how their business is set up and how it is categorized under the law is crucial for…