Business Transactions

Finding an Exemption to State Securities Registration for the Sale of Equity in Your Company

In my last postings, I discussed compliance with federal securities laws and finding an exemption to registration with the Securities and Exchange Commission when you want to raise money by selling equity in your company.

In this posting, I'll discuss compliance with state securities laws.

Finding an Exemption to Federal Securities Registration for the Sale of Equity in Your Company

In my last posting, I mentioned Rules 504, 505, and 506 of Regulation D as an exemption to federal securities registration.  If you meet all the requirements of Rule 504, 505, or 506, you are in a “safe harbor” and can be certain your offering qualifies as private under federal law.

All offerings under Rule 504, Rule 505 and Rule 506 have the following characteristics:

Selling Equity in Your Company and Compliance with Federal Securities Laws

In my last posting, I explained that when you sell equity in your company, you must either (i) register with the Securities and Exchange Commission (“SEC”) and with each state in which investors reside, or (ii) qualify for an exemption to registration. 

Registration is time-consuming and costly. Fortunately, private offerings qualify for an exemption.

Are You Selling Securities Without Realizing It?

If you take money from someone who will share in future company profits but will not actively participate in the operation of your company, you have sold a security.  This holds true whether you’re seeking to raise Ten Thousand Dollars or Ten Million Dollars.

Steps in a Business Transaction. Part Six. Closing and Ancillary Documents.

This is Part Six in a series discussing steps in a business transaction.  In this part, I’ll discuss closing and ancillary documents.

For simple transactions, the “closing” simply consists of the parties signing the final version of the definitive agreement and making any payments due upon signing. For more complicated transactions, signing of a definitive agreement sets forth all the steps that are to occur prior to the closing. 

Steps in a Business Transaction. Part Five. Due Diligence Review.

This is Part Five in a series discussing steps in a business transaction. In this part, I’ll discuss the due diligence review. In short, a due diligence review is your chance to make sure that you are receiving in the transaction that for which you have bargained.

The scope of the review depends upon the transaction. If you are spending a few million dollars to purchase or invest in a company, you will do a more thorough due diligence review than if you are entering a licensing agreement that can be terminated with thirty days notice.

Steps in a Business Transaction. Part Four. Regulatory or Third Party Approval.

This is Part Four in a series discussing steps in a business transaction. In Parts One, Two, and Three, I discussed term sheets, definitive agreements, and financing. In this part, I’ll discuss regulatory and third party approvals.

Steps in a Business Transaction. Part Three. Financing.

This is Part Three in a series discussing steps in a business transaction. In Parts One and Two, I discussed term sheets and definitive agreements. In this part, I’ll discuss financing considerations.

There are several methods of financing. Having the money required to complete the transaction available in your company or personal account certainly simplifies matters from a legal and paperwork point of view. However, there may be good business reasons that you want to use other sources of money for your transaction.

Other forms of financing include, private investor financing, venture capital financing, bank financing, and seller financing. These are the forms of financing most commonly used by my clients; however, the list is not exhaustive. Each method offers pros and cons.

Steps in a Business Transaction. Part Two. Definitive or Long-Form Agreements.

This is Part Two in a series discussing steps in a business transaction. In Part One, I discussed term sheets, also sometimes referred to as letters of intent or deal memoranda. In this part, I’ll discuss preparation of the definitive agreement for your transaction.

Steps in a Business Transaction. Part One. Term Sheets.

In this blog series, I’ll discuss the steps in a business transaction. Of course, the steps in any particular transaction will depend on its objectives and complexity. Buying a company, licensing technology, financing your business, merging with another business, or partnering with another company for a project are all business transactions; however, each may not require all the steps I’ll discuss in this series.

Hence, my comments are general. Let’s start with term sheets.