Legal Updates for PE and VC Funds
VC Appointed Directors A recent decision in a case (in which I was personally involved) has been handed down by a bankruptcy judge in the Northern District…
The Essential Guide to Liquidation Preferences
A liquidation preference gives the VC investor a "first right" to any proceeds available to shareholders in the event of a liquidation or trade sale of the company. Although a liquidation preference provides the VC investor with downside protection by giving them the first money out of the company that is paid to shareholders, it can also significantly increase the upside to an investment.
So You Think You Own Preferred Stock?
It is no secret that the bulk of today's activity in the private equity sector is taken up with late rounds of financing. Typically, the VCs (ie, private equity funds, including but not limited to funds which are the incumbent in a particular company's series of preferred shares) negotiate the terms of, let's call it, the Series D round ' a so-called "follow on" round. The D Round succeeds, in point of time, the initial issuance to the following investors: common stock to the founders, friends and family and sometimes angels, followed by Series A, B and C convertible preferred shares, to the professional investors.
Non-disclosure Agreements in Venture Capital Transactions
Occasionally a venture fund will receive a request from a potential portfolio company for the venture fund to sign a non-disclosure agreement prior to commencement of due diligence. The proposed non-disclosure agreement would commit the venture fund to maintaining the confidentiality of the company's information disclosed to the venture fund in the course of the due diligence investigation. Entering into non-disclosure agreements could restrict the future investing and disclosing activities of the venture fund or its principals.
Departing Partners: Duties and Pitfalls
A modern day fixture of the law firm is the revolving door. The increasing frequency with which partners leave law firms for new ones raises many issues concerning the permissibility of a withdrawing attorney's conduct regarding client/attorney solicitation, removal of client files or other documents and breach of anti-competition clauses in partnership agreements. In addition to adherence to the professional ethical rules, a partner is subject to a fiduciary duty to his firm and is thus constrained by such duty throughout the life of the partnership.
The Lateral Partner Process: Three Perspectives
According to <i>The American Lawyer</i>, fully 40% of partners in the AmLaw 200 firms will move laterally at least once as partners. This is an astonishing statistic, since lateral partner movement was virtually unheard of a generation ago. Freed from the stigma that once haunted a partner who abandoned his partnership, today's law partners tend to be pragmatists who no longer view their firms as homes for life. Instead, they see them as vehicles to drive their businesses to higher levels. In this article, we take a brief look at lateral partner recruitment from the different perspectives of the law firms, the candidates and the recruiters.
A Word to the Wise
Discovery of electronic communications. Employees generally cannot live without it (if they hope to state a claim), but often cannot afford to pay for it. Employers can generally afford to pay for it, but resent paying to help a plaintiff make his or her case against them. This dilemma is only further exacerbated by the proliferation of electronic communications that has made the discovery of such information very time-consuming and expensive.
Dispute Resolution Gets a Makeover
Several governmental and regulatory bodies have announced new initiatives aimed at increasing access to their dispute resolution programs, strengthening the credentials of their neutral panels, and improving the efficiency of their dispute resolution processes. These decisions were reached, in part, after evaluating success rates and feedback relating to these dispute resolution programs.
