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Every founder eventually faces diligence, whether for a capital raise, a sale or a strategic partnership. The ones who come through it with minimal disruption and no valuation surprises almost always ran an internal review before the process started. A problem caught internally is a line item. The same problem caught by outside counsel during an active deal is a negotiating point. Cap table accuracy cannot be assumed Stock ledgers, option grants, board consents and amendment

Joint ventures offer growing companies a way into new markets, products or geographies without the full capital outlay of going it alone. They also generate a disproportionate share of business disputes, nearly always because the agreement did not anticipate the situation that eventually created the conflict. Governance structure should be settled before profit split Partners negotiate economic terms first because numbers are easy to agree on early in a relationship. Governan

The assumption that growth capital requires equity is one of the more expensive defaults in founder finance. Debt, in its various forms, can fund the same growth without diluting ownership. For a business with the right profile, it is frequently the better tool. The decision deserves more analysis than it usually receives. Revenue predictability determines eligibility Lenders underwrite debt against the confidence that cash flow can service it. A business with recurring, pred

Once a sponsor is on the cap table, acquiring smaller competitors or complementary businesses becomes a core part of the growth strategy. The add-ons that go smoothly share one consistent characteristic: the diligence was real, done early and treated as the primary risk-management tool, not as paperwork before signing. The diligence standard rises with a sponsor involved A sponsor will apply a level of scrutiny to the target company that reflects the investment thesis for the

Receiving a term sheet is a genuine milestone. It is also a moment when the natural emotional response, which is excitement, works against the analytical task at hand. The investor who drafted that document reviewed it for where they hold leverage. Reading it any other way costs founders money. What is missing matters as much as what is there Some investors leave protective provisions out of the initial draft knowing they can introduce them later in definitive documents if th

Simple Agreements for Future Equity took over early-stage fundraising for good reason. They are fast, inexpensive and avoid the valuation negotiation that a priced round requires. They are also the instrument founders most commonly stack in ways that create problems at the priced round that eventually follows. Stacking SAFEs creates dilution math founders do not see coming Each SAFE carries its own valuation cap and sometimes a discount rate. When several are raised over 18 m

When a sponsor acquires a business, the founder is rarely cashed out completely. Most transactions involve an equity rollover, where the founder reinvests a portion of sale proceeds into the new ownership structure. It is a standard structure and frequently a sound one. It also gets signed regularly without a full understanding of what the founder is rolling into. The new equity is not the same as the old equity Rollover shares typically convert into a different class of equi

Founders negotiate hard on valuation because it is the only figure that appears in every summary of the deal. Liquidation preferences, which receive a fraction of that attention, frequently determine what a founder walks away with when the company is eventually sold. What the preference controls A liquidation preference sets the payout order before any sale or liquidation proceeds reach common shareholders. A 1x non-participating structure returns investor capital first, then

Founding a company creates no inherent legal right to keep running it. Control comes from votes at the cap table and at the board table. The moment outside capital closes, those numbers shift, and the practical effect is not always obvious until the first contested vote goes against the founder. Seat count is not the whole story A founder can hold a 3-to-2 board majority and still lose every contested decision if voting thresholds for specific categories are built into the go

Read David Bain’s feature in Inc. on writing promissory notes for early-stage companies. These agreements can play a critical role in helping businesses secure the capital they need to grow. “You have to spend money to make money, as the old saying goes. But sometimes you have to borrow money to spend money, too.That’s why entrepreneurs often look to raise outside funding in pursuit of growth—and, especially when pursuing early-stage “friends and family” funding, do so using

The standard line about term sheets is that they are non-binding. Technically, that is often true. Practically, the term sheet is where the deal gets decided. By the time attorneys are drafting definitive agreements, the investor treats the economics and control provisions as settled. The leverage to renegotiate has largely disappeared. Founders who treat the term sheet as a rough draft tend to discover this too late. Control provisions determine who is running the company Bo

The first term sheet from a private equity firm tends to arrive looking deceptively ordinary. A PDF attachment, some proposed economics, a note about next steps. What it represents is the most consequential negotiation most founders will ever conduct, against counterparts who have run this exact process dozens of times. Getting it right starts well before any term sheet arrives. Clean house before the conversation starts Diligence will surface whatever is wrong. The only ques

Internal Revenue Code (IRC) Section 1202 provides a massive tax savings opportunity for seller's of Qualified Small Business Stock.

Use the premortum project management strategy to prepare for your business sale and avoid pitfalls that could derail your deal.