Planning for Exit Events
Upcoming SlideShare
Loading in...5
×
 

Planning for Exit Events

on

  • 273 views

Explores timing of exit planning, carefully selecting an entity, proper maintenance of the corporate form, proper equity allocation/incentives, allocation of ownership, IP, handling prospective ...

Explores timing of exit planning, carefully selecting an entity, proper maintenance of the corporate form, proper equity allocation/incentives, allocation of ownership, IP, handling prospective employees, risk management, and advisor selection.

Statistics

Views

Total Views
273
Views on SlideShare
266
Embed Views
7

Actions

Likes
0
Downloads
1
Comments
0

1 Embed 7

https://twitter.com 7

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Planning for Exit Events Planning for Exit Events Presentation Transcript

  • Planning for Exit Events Mick Bain Attorney Advertising
  • WilmerHale 2© 2014 Wilmer Cutler Pickering Hale and Dorr LLP What to do now? Isn’t it too early?  Focus on Certain Cost-Effective Things Too Often Not Done or Not Done Well – Select proper form of entity – Select experienced advisors – Equity allocation – Tax, tax, tax – Observe formalities – Protect intellectual property – Watch for problematic contract provisions – Conduct employee checks – Risk management
  • WilmerHale 3© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Carefully Select Entity  Tax concerns  Limited liability  Keep things simple  Typically a “C” corporation  Take care with respect to board composition  Clarity as to equity ownership at all times  Example: closely-held company with no records
  • WilmerHale 4© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Properly Maintain the Corporate Form  Observe corporate formalities – Have good records – Hold regular board meetings; keep minutes  Properly authorize stock issuances and major contracts
  • WilmerHale 5© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Properly Maintain the Corporate Form  Adopt policies in key areas such as – trade secrets – non-discrimination – corporate communications/confidentiality – harassment – securities compliance
  • WilmerHale 6© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Provide for Proper Equity Allocation/ Incentives  Capital constrained; need to use equity to attract and retain  Consider how to allocate property  Avoid the “woodwork”  Need compliant equity plans – tax reasons
  • WilmerHale 7© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Provide for Proper Equity Allocation/ Incentives  Watch out for “hidden” tax and accounting problems – 409A – 123R – 83(b) elections – Cheap stock
  • WilmerHale 8© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Carefully Allocate Ownership  Non-accredited investors and the securities laws  Don’t use non-registered capital raisers  Proper records are a must  Offer letters/oral promises  A shareholders agreement can help
  • WilmerHale 9© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Provide for Good Title to Intellectual Property  Robust form of agreement for inventions and NDA  Make sure everyone signs it  Need advice from a labor/IP lawyer here
  • WilmerHale 10© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Provide for Good Title to Intellectual Property  Take reasonable steps to protect your trade secrets, such as sensibly limiting access  Perform trademark search early
  • WilmerHale 11© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Check Out Prospective Employees Carefully  Background checks  Are they subject to a non-compete?  Are they subject to a non-disclosure?
  • WilmerHale 12© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Review Tax Treatment for Employees and Plans Carefully  Cultural inclinations vs. IRS positions  Use of independent contractors  Be sure all filings are being made, e.g., forms 5500
  • WilmerHale 13© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Risk Management  Central person, often CFO  Any complaint, threat or demand should be centrally filed  Disaster recovery plan – off-site storage and back up; consider IT infrastructure  Insurance e.g., D&O, casualty, etc.  Privacy Laws  Document Retention  Policies – whistle blower, etc.
  • WilmerHale 14© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Be Vigilant in the “Big” Contract Context  Unfavorable provisions can have significant impact  Exclusive distribution arrangements  Consents required in a change of control  Use of the term “affiliate” in non-compete or a license  Right of first offer in public offerings CONFIDENTIAL TREATMENT
  • WilmerHale 15© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Carefully Allocate Ownership  Watch out for conflicting promises, e.g., registration rights agreements, rofr’s, etc.  Make sure promises terminate at the right time, e.g., guarantees for founders, ability to nominate to board, etc.  Problems with big/controlling shareholders
  • WilmerHale 16© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Select Advisors Carefully  Lawyer, at a minimum, should provide good form files to save you money and time – Need SEC and M&A experience – Ask about experience dealing with liquidity events – Can perform audits to minimize future problems
  • WilmerHale 17© 2014 Wilmer Cutler Pickering Hale and Dorr LLP Select Advisors Carefully  Public accountants critical if IPO is an option – Need SEC and M&A experience – Can help avoid big problems in areas such as revenue recognition and earnings charges Wilmer Cutler Pickering Hale and Dorr LLP is a Delaware limited liability partnership. WilmerHale principal law offices: 60 State Street, Boston, Massachusetts 02109, +1 617 526 6000; 1875 Pennsylvania Avenue, NW, Washington, DC 20006, +1 202 663 6000. Our United Kingdom offices are operated under a separate Delaware limited liability partnership of solicitors and registered foreign lawyers authorized and regulated by the Solicitors Regulation Authority (SRA No. 287488). Our professional rules can be found at www.sra.org.uk/solicitors/code- of-conduct.page. A list of partners and their professional qualifications is available for inspection at our UK offices. In Beijing, we are registered to operate as a Foreign Law Firm Representative Office. This material is for general informational purposes only and does not represent our advice as to any particular set of facts; nor does it represent any undertaking to keep recipients advised of all legal developments. Prior results do not guarantee a similar outcome. © 2014 Wilmer Cutler Pickering Hale and Dorr LLP