Debt & Equity Financings Articles

Planning for the most favorable tax treatment on their investment is always a major consideration for investors. Because of a renewed interest in using C corporations as investment vehicles as a result of the reduction to the corporate tax rate to 21% under the Tax Cuts and Jobs Act of 2017, investors have shown a renewed interest in the potential tax benefits under Section 1202 of the Internal Revenue Code (IRC), making understanding its basics important for corporate founders and CEOs and prospective investors alike.

Venture capital firms and other equity investors commonly request the right to have an observer attend the board of director meetings of their portfolio companies.

When seeking investors, entrepreneurs and business owners may be approached by individuals, including friends and family, who do not qualify as “accredited investors” under securities laws. Depending on where a business is in its lifecycle, accepting funds from these types of individuals may range from appealing to essential, or a business owner may simply desire to include them in the investment opportunity.

You’re ready to sell your business or bring on a major investor, have hired a knowledgeable investment banker to manage the process, and now you’re entertaining one or more offers from interested private equity (PE) firms.

Hiring and keeping talented employees is a challenge for many businesses, but in particular for startups and early-stage companies that are more limited in the amount of cash flow they can commit to competitive salaries.

Profits interests are the most well-known and commonly used form of equity compensation used by partnerships and limited liability companies that are taxed as partnerships to incentivize key service providers to remain invested in the success of the company.

Startups and entrepreneurs seek to raise early stage capital in a variety of ways, but one of the most common is through a convertible debt structure utilizing a promissory note that can be converted into equity securities of the issuing company on the occurrence of various events stated in the note.

Whether you’re just starting a new business or are preparing to scale your existing company to get to the next level, it’s common to seek out potential Attract Investors to provide the capital your company needs to take flight. Unfortunately, most founders can’t just make an appearance on Shark Tank and get top deep-pocketed investors immersed in bidding wars over funding their companies.

“Drag-along” and “tag-along” provisions are staples of venture capital and other investment agreements. They are often included in investors’ rights or shareholders’ agreements for corporations or operating agreements for limited liability companies.

Are you considering a business Partnership Agreements? When structured properly, a partnership can benefit your business in ways supported by the timeless adage that “two heads are better than one.”