There are important issues that need to be carefully considered and discussed with respect to SAFE (Simple Agreement for Future Equity) agreements. (Yes, I know that’s redundant.) Let’s take a look: Valuation Cap This is arguably one of the most critical aspects of a SAFE. The valuation cap essentially sets the maximum valuation at which … Read more
The covenant of good faith and fair dealing is a fundamental principle that governs contractual relationships. It is an implied duty that requires parties to a contract to act in good faith and deal fairly with each other in performing their obligations under the agreement. This covenant serves as a safeguard against actions that may … Read more
When it comes to purchases and financial transactions, you’ve likely heard the terms “warranty” and “guaranty” thrown around. While they both provide a form of protection or assurance, there are distinct differences between the two. What is a Warranty? A warranty is essentially a promise made by a manufacturer or seller about the performance, quality, … Read more
Earnouts serve a valuable role in bridging valuation gaps that frequently arise when buyers and sellers negotiate the pricing for an acquisition. Buyers typically apply conservative projections and valuations to limit overpaying, while sellers push for valuations based on their more optimistic future performance expectations. Earnouts allow a portion of the purchase price to be … Read more
A letter of intent or LOI is a document that’s often used to outline the preliminary understanding between parties before entering into a formal contract or agreement. Below, I outline the common mistakes in LOIs and how to avoid them. Parties should address these common mistakes and taking proactive steps to draft clear, comprehensive, and … Read more
AI can automate various aspects of the due diligence process, such as document review, redlining, and contract summarization. By automating routine tasks, AI frees up M&A professionals to focus on higher-value activities, such as strategic analysis and negotiation. I give more particulars below after the video. By automating routine tasks and leveraging AI-driven analytics, M&A … Read more
Non-competition / Employer: no loss, all gain / Sign the non-compete / Non-competition / Employee: fettered in chain? / Hold the non-compete / More on non-competition agreements here.
Here are two examples of contractual provisions that just made me chuckle: The first is from an asset purchase agreement. It’s not unusual for contracts to provide that the death of a key person will be a default. But how many allow that particular default to be cured? Buyer shall be in default under the … Read more
Looper reports that the late Sir Sean Connery — who will always be my James Bond — had an unusual clause in his movie employment contracts. According to Alan Moore, the award winning comic book writer and creator of Watchmen, V for Vendetta, Batman: The Killing Joke and The League of Extraordinary Gentlemen, among many … Read more
If you’re buying or selling an entity – or its assets – you should be aware of a new notice from the Small Business Administration (“SBA”). If the seller has received Paycheck Protection Program (“PPP”) funds, it must notify the funds lender that the seller intends to enter into a sales transaction that would constitute … Read more
Outside of a dog, a book is man’s best friend. Groucho Marx Your business is doing well. So well, that you’re thinking it’s time to expand. One possibility is to slowly continue to build the business by adding customers or clients one at a time. Another possibility is to quickly add new customers or clients by … Read more
No two deals are alike. However, it’s useful to at least think about the following items when shaping and negotiating a deal. 1. Finding the buyer or seller a. Networking, professional and social b. Competitors c. Business brokers d. Investment bankers2. Useful professionals a. Lawyer b. Accountant c. Investment banker d. Tax advisor3. Before serious negotiations and discussions begin, consider a. Entering into a confidentiality … Read more