Paul Clark

Exits: Taxes

So, finally! Our preferred shareholder has a distribution. Less than expected by the naïve optimists hearing the headline price, but still it’s nice to see money flowing back from an exit. Now what? ’Tis impossible to be sure of any thing but Death and Taxes. Indeed....

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Exits: The Last Complications

The pie is so close you can almost taste it. But wait a second! Escrow accounts In most transactions, the buyer will insist that some of the proceeds are set aside into an escrow account. Why? Despite all the diligence an acquirer might do on a company, they cannot...

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Exits: Dividing the Pie

As we’re close to the bottom of the waterfall, we are now including a third metaphor as we figure out how to “divide the pie”. Management Bonuses An acquiring company is typically buying a company and, at least for a while, its management team. The buyer, therefore,...

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Exits: The First Evaporations

There are a few immediate claims on the water heading into the waterfall; some of these are fairly obvious, others are more complicated or controversial. Transaction fees Investment bankers, attorneys, accountants, advisors, and other service providers that have...

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Exits: Waterfalls

Nothing happens in investing without flowery metaphors. When we discuss “exits” we are talking about getting our money back out of an investment. This can happen in several different ways. Typically, we are talking about a company being acquired, either by another one...

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Capped participating preferreds: wrap up

Hopefully between the prose and the spreadsheet, we have illuminated the cost of the compromise for founders and investors finding this middle ground of a “capping participation.”If not, at least you hopefully come away knowing that VentureSouth would never willingly...

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