Tag: acquisition
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What Happens to the Option Pool if a Startup is Acquired?
The option pool is the amount of common stock a startup reserves (typically at each series of financing) for future issuances to employees, directors, advisors, and consultants. For example, if a startup has 5,000,000 shares of common stock outstanding immediately before the Series A round, a condition of the Series A round may will be…
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Selling Your Startup with Convertible Debt
I previously mentioned that convertible debt is a good way to raise capital for most startups. The main reason why convertible debt is beneficial for startups is that it delays coming up with a valuation figure at the seed stage–the valuation conundrum is essentially punted to the Series A (or “qualified financing” stage). But what…
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How To Handle Intellectual Property When Buying A Business
The business purchaser needs to ascertain if intellectual property rights are needed for the continued operation of the business. Intellectual property rights that are important include trademarks, copyrights, service marks, and trade names. All of these IP rights are assignable. For example, the ownership of a copyright may be transferred in whole or in part…