Venture Capital Exit Strategies and Pitfalls: Share Conversions, ROFRs, Voting Rights, Employee Stock Options

A live 90-minute premium CLE video webinar with interactive Q&A


Tuesday, June 29, 2021

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

or call 1-800-926-7926

This CLE webinar will examine the issues founders and investors should consider in negotiating and drafting exit provisions connected with venture capital financing. The panel will discuss how best to navigate anti-dilution provisions, employee stock options, convertible securities, right of first refusal (ROFR), and co-sale provisions to ensure a successful future exit.

Description

When negotiating and documenting venture capital investments, founders and investors must focus on potential exit strategies and how they might be affected by management provisions, equity incentives, and the company's capital structure. Venture capital documentation must be drafted to avoid unintended consequences in the event of an IPO or acquisition.

The parties should consider existing shareholders' rights and how an exit event will impact them. An IPO or acquisition might trigger a conversion of convertible securities and warrants or anti-dilution provisions. Secondary transactions may trigger ROFRs and other shareholder options that could result in the vesting of stock and negatively affect valuation.

Employee stock awards could also present a stumbling block and should be structured to integrate into the IPO or acquisition transaction. Options with accelerated vesting may lower the sale price in an acquisition, as they require additional capital from the buyer to retain these employees.

Investors typically negotiate for expanded voting rights, while founders will seek to limit these voting rights to events that directly affect an investor's economic rights. Registration rights provisions can result in confusion or conflicts during an IPO or acquisition process and should be drafted with care.

Listen as our authoritative panel discusses venture capital exit strategies and pitfalls of particular concern to investors and founders.

READ MORE

Outline

  1. Planning for the exit: initial considerations
  2. Anti-dilution provisions
  3. Employee stock options and grants
  4. Investor voting rights
  5. Registration rights
  6. ROFRs, co-sales, and other shareholder options

Benefits

The panel will review these and other relevant issues:

  • Why is it so important to consider the exit strategy when a venture capital investment is made?
  • How might employee stock options and stock grants present issues in an acquisition transaction?
  • What features of convertible securities and other shareholder rights can present problems for an IPO?
  • What kinds of voting rights are "market" for early investors, and how do they affect later rounds?

Faculty

Allen, Natasha
Natasha Allen

Partner
Foley & Lardner

Ms. Allen is a strategic advisor for her clients, supporting leadership teams in complex decision making. Prior to...  |  Read More

Chow, Eric
Eric Chow

Senior Counsel
Foley & Lardner

Mr. Chow is a business lawyer and a member of the firm’s Transactions Practice. Prior to joining Foley, he gained...  |  Read More

Diamond, Brandee
Brandee L. Diamond

Partner
Foley & Lardner

Ms. Diamond provides legal advice to investors, corporate boards, and public and private companies in a range of...  |  Read More

Lehot, Louis
Louis Lehot

Partner
Foley & Lardner

Mr. Lehot focuses his practice on advising entrepreneurs and their management teams, investors and financial advisors...  |  Read More

Attend on June 29

Cannot Attend June 29?

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include program handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

Download