Buying and Selling Venture-Backed Companies

August 28, 2017

Kim D. Larsen

Publication
VC-List

Kim D. Larsen


Assuring the Benefit of the Bargain for All Parties
Acquisition of a tech-backed startup can be a shrewd tactic by an established tech company and a magical moment for stakeholders of the startup. All too often, however, the structure of the deal reflects misunderstandings and overreaching that derail the tech company’s ambitions and sour the outcome for the startup’s founders, employees and VCs.  Due diligence, honest appraisal of motivations and appropriate structuring of the transaction make it more likely that the transaction will work for all parties.

Significantly, if the company is in a highly regulated field such as banking, insurance or securities trading, the transaction should be structured to pass regulatory muster and documents should allow ample time for all regulatory approvals, and the VCs should be briefed on their disclosure obligations underlying the approval processes.

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