investment agreement
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Liquidation preferences: how are investment proceeds shared?
Liquidation preferences change the allocation of proceeds between investors and other shareholders. We examine their economics, including a capped participating preference example.
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Escrow account: securing transaction settlement
An escrow account allows payment of part of the price to be made subject to agreed conditions. How it works depends on the account structure and the terms agreed with the bank.
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Selling a business: liability for representations and warranties
Representations, warranties and W&I insurance allocate transaction risk. When comparing protection, distinguish the transaction value from the liability limit.
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How often does a VC fund exit through an IPO?
VC funds investing in growing companies primarily seek the target return envisaged when the investment agreement is signed, after a specified investment period, usually up to ten years. The following exit routes are currently identified…
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Transaction pricing: completion accounts, earn-outs and locked boxes
A price based on the company’s position at completion, post-acquisition results or historical locked-box accounts? These mechanisms address different risks.