In my last post, I discussed the value of stockholders agreements, including concepts typically covered and timing considerations for putting them in place. While stockholders agreements allocate management, information, and similar rights amongst the stockholders of a corporation, a related agreement—a buy-sell agreement—details the corporation’s and its stockholders’ rights when certain triggering events occur. Buy-sell
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Starting and running a business is hard. On top of the factors that business owners typically focus on when running a successful business—product development, customer acquisition and retention, financial hygiene, etc.—businesses with multiple owners must address the interpersonal dynamics of going into business with others. When a business is new, there is a tendency to
Continue Reading Hard Conversations – The Value of Stockholders Agreements
In my last post, I discussed why most high-growth, venture-backed startups elect to do business as C Corporations. In this post, I focus on the unique benefits offered by LLCs and when a startup may opt for an LLC over a C Corporation.
Ability to Offset Startup Losses Against Other Income
As discussed in a
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In our initial posts, we discussed formation considerations for startups and founders, including choice of entity considerations. In those posts, we assumed that the startup would opt for a state law corporation taxed as a C Corporation, as the vast majority of startups end up going this route. In this post, we dig deeper into
Continue Reading Why Most Startups Incorporate as C Corporations
We’re back with part two of our discussion of formation considerations for startups and founders. Items one through four were covered here.
5. Transfer Restrictions on Shares.
Founders should consider whether to impose transfer restrictions on shares issued at formation. Transfer restrictions put guardrails on how and when shares can be transferred to
Continue Reading Formation Considerations for Startups and Founders: Part 2
If you’re reading this, you’ve likely decided to take the leap and found a startup. Or, you’re at least thinking about making the leap. Startup founders are faced with a number of critical decisions at formation. Certain decisions are specific to the startup and others apply across the board. The concepts discussed below routinely come
Continue Reading Formation Considerations for Startups and Founders: Part 1