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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.