Preparing for Due Diligence for the Sale of a Company

There are steps that you can take in advance to prepare for due diligence in connection with the sale of your company. The documents and information that will be of greatest interest to an acquiror depend on the reasons the acquiror wants to buy your company. Establishing good record-keeping habits early or at least well in advance of a transaction will help keep momentum as you work toward the closing, reduce the chances that any skeletons in the closet will become bargaining chips for the acquirer, and preserve some of your sanity.

Executives who have not led a sale or merger of a company before are often caught off-guard by how much work goes into due diligence. For many who are successful, the building of the business crescendos and culminates in a sale. The term sheet is signed, you smell the money, and perhaps even book your post-closing vacation, but you may not realize that you’ve just signed up to run a muddy obstacle course race while also running your business. Your next several weeks, maybe months, will be consumed by responding to page after page of information and document requests from your potential acquirer. You will be questioned about all aspects of the business. Because you want to keep the pending transaction under the radar and limit the impact on your business if the deal does not go through, you assemble the smallest employee team possible to help you with the transaction. You may find yourself requesting files and summaries from various employees in the guise of another business need, copying after hours, and arranging off-site meetings with the acquiror.

To preserve some of your sanity during an M&A transaction, there are steps that you can take in advance to prepare for due diligence. Continue reading →

Capital Saving and Raising at the Brink

At the Capital Saving and Raising at the Brink event held as part of the 2011 Forward Technology Festival, the tech community collaborated on best capital saving ideas, discussed experiences related to capital raising, and gave short pitches on new ideas.

The Capital Saving and Raising at the Brink event held Monday, August 22, 2011 as part of the Forward Technology Festival was a success! Entrepreneurs, investors, government representatives, and others interacted and shared ideas in a collaborative forum.

Capital Saving

In the Capital Saving segment led by Troy Vosseller, attendees were divided into six teams, and each team collaborated to identify the ways in which they have saved capital in their businesses. Teams simultaneously entered their ideas in different tabs of a GoogleDocs workbook. Team captains pitched their team’s top two ideas, and attendees voted electronically on the top two ideas. The winning ideas were: Continue reading →

Electronic Minute Books 2.0

Keeping an organized, complete minute book is necessary for establishing the legal record of actions properly documented, retrieving information, and quickly disclosing documents to investors for due diligence. The following article compares the traditional paper method to various more efficient and searchable electronic options.

As a paralegal, I have done my fair share of preparing and updating corporate minute books. Keeping an organized, complete minute book is necessary for establishing the legal record of actions properly documented, retrieving information, and quickly disclosing documents to investors for due diligence, among other reasons. Despite the proliferation of electronic files, physical copies of minutes and consents are still typically kept in three-ring binders or those confounded hard red books. Neither Wisconsin nor Delaware laws require that minutes be kept in original, hard copy. Continue reading →

The Confusing World of Joint Ownership of Intellectual Property

A confusing topic for many emerging companies is joint ownership of intellectual property. Many of the implications of jointly owned intellectual property are counterintuitive. In this post, we breakdown the implications of joint ownership by the default rules in the United States for patents, copyright, trade secrets, and trademarks.

A confusing topic for many entrepreneurs is joint ownership of intellectual property. It often comes up in connection with joint development arrangements, subcontracting portions of work, joint ventures, and other collaborative projects involving intellectual property development, whether it be in connection with software, cleantech, medical device, drug development, or other technology-based initiatives. Continue reading →

Who Owns the Rights to Customer Feedback?

An issue in many software licenses and SaaS service agreements relates to who owns or has rights to use customer feedback related to the software or SaaS offering. This post addresses the intellectual property issues related customer feedback and the approaches many companies take to customer feedback.

Suppose a customer proposes an idea to improve the software or SaaS offering of a company. The company likes the idea so much that it integrates the idea into its next upgrade. The question becomes, who owns the idea that is integrated into the software or SaaS offering?

As a general rule, the person who creates an idea, authored work, invention, or process, owns the related intellectual property. There are exceptions to the general rule. But, in the software and SaaS arena involving licensors and licensees, the general rule applies in most circumstances. Continue reading →

Finders under Fire

Small businesses often have challenges with raising capital from investors. Recent government enforcement actions and commentary from regulatory agencies, however, emphasize some of the risks associated with working with unlicensed finders to raise equity capital.

Small businesses often have challenges with raising capital from investors. Gaining access to equity capital can be difficult and complying with a myriad of rules and regulations when seeking help in raising funds can be very confusing. When raising equity capital, many entrepreneurs seek assistance from unlicensed “finders” for introductions to potential investors. Recent government enforcement actions and commentary from regulatory agencies, however, emphasize some of the risks associated with working with unlicensed finders.

So . . . What do Finders Find?

Generally, finders make introductions between investors and companies, but do not actually sell securities or close transactions on behalf of the companies selling the securities. If a finder is providing anything more than a simple introduction or access to contact information, or is receiving a fee based on the completion of a transaction, then the finder needs to be licensed as a broker-dealer. Continue reading →

Bridge Financing Documents

One of the sets of documents that we have automated at AlphaTech Counsel is the bridge financing documents for an emerging company. Attached is a sample of the documents.

One of the sets of documents that we automated at AlphaTech is the bridge financing documents for an emerging company. Attached is a sample of the documents: Convertible Note and Subscription Agreement

Instead of just using form documents as most law firms do, robust automation allows us to deliver common document sets for emerging companies in a more efficient manner. So what else does “robust automation” yield? It improves document accuracy, provides a valuable knowledgebase from which to draw, and enables us to deliver common document sets to our clients quickly. It also frees up time of our lawyers to enable them to spend less time on basic contract drafting and more time on activities that afford our clients higher value. Continue reading →