All securities offerings fall into one of three classes:
1. Registered,
2. Exempt, or
3. Illegal.Private offerings of securities are just that – “private”.
The key for any private offering is that the offerer may only
solicit investors through private methods. There are all
sorts of rules around what constitutes private solicitations and to
whom the solicitations can be made, but in general "private" means
that which is not public. If a business attempting a private
offering makes a...
Read More »
I've had several conversations with concerned
entrepreneurs over the last year about changes in the accredited
investor standards under the Dodd-Frank Act. In January the SEC
proposed amendments based on Dodd-Frank to the accredited
investor standard which subtracts the net equity value of an
investor’s primary residence from that investor’s net worth
determination.
Example: Currently if an investor has $800k net equity before
equity in primary residence and $300k in net equity in the...
Read More »
I read a Guy Kawasaki blog post this week where he walked through
six reasons why an abundance of capital can hurt an early stage
business. In my entreprenurial law / funding law practice I
work with a lot of business owners through capital strategies and
the private equity processes. Honestly, the drafting of a
private placement memorandum is the easy part of my practice.
The hard part is creating the proper capital structure for
the long term growth and success and reaching investors who...
Read More »
2010 continues to prove successful for many of our clients.
In the area of business law and private equity we continue to see
many of our clients receive funding and meet their capital
goals. That is exciting. We are up to 9 clients that
have done so this calendar year.
We have several other clients who are still pursuing capital under
a Red D exemption / private placement offering. We are very
cautious about who we take on as clients, and I am hopeful that
each will be funded in full soon.
I...
Read More »
If you are a founder of an emerging company looking to do your
first capital raise, consider talking to angel investors BEFORE
having your private equity attorney draft the organizational and
exempt securities documents for your private placement
offering. I meet a lot of business owners at this stage who
make guesses as to what investors are looking for and what the
market will bear. What pre-money valuation should we use?
What preferences (if any) should we include in the private
placement...
Read More »
Most business owners who are raising capital are willing to take
capital from just about anywhere. Investors are a means to an
end of meeting capital requirements and scaling a business towards
profit. As Indianapolis is the “biggest small town in
America” and the number of investors and amount of private
investment capital is limited, certain business owners find looking
outside of the state for capital is beneficial. In my SaaS
law practice, for example, I see a lot of companies look...
Read More »
I love Indianapolis,
but I find it a difficult place for emerging companies to raise
capital through private placement offerings. More established
companies have less trouble, but earlier stage companies often are
caught in a chicken/egg situation – they need capital to move to
the next business stage, but private equity investors don’t want to
invest until they are through that next stage.
Part of what makes Indiana so great is that we are very fiscally
conservative. In fact we were one of only...
Read More »
What
happens if you do not follow securities law procedures to a "T" in
private placement offerings? The answer is messy. In
large part it depends on what type of securities law violation you
are talking about.
The first type of violation is procedural. Examples may
include a company relying on a 4(2) exemption but offering certain
securities to non-sophisticated investors (which is a Section 4(2)
requirement). Another example may be simply failing to make,
or untimely make, a securities...
Read More »
This last week has been a whirlwind
including trips to Scottsdale, AZ and Newport Beach, CA. I
first attended an ABA private equity conference in
Scottsdale. The focus was on securities regulations for
exempt offerings. Sounds boring, I know, and parts of it
definitely were. But this area of law is the foundation
underlying my partnership with clients in their strategic growth
and capital phases.
Raising capital is both an art and science. The art is in the
structuring of capital...
Read More »
There
are several obstacles to face with a young start-up company, and
typically one of the main concerns is raising capital in compliance
with funding law. One method companies can use is offering
the sale of stock or membership interest in their company through
private placement offerings to a limited number of private
investors.
A private placement offering is differentiated from a
public sale of securities that must be registered with the
Securities & Exchange Commission, namely because of...
Read More »
One
of the business law firms located in downtown Indianapolis,
Alerding Castor, LLP began in April of 2007 and has now recently
added Brian Hewitt as partner. Under
the new name, Alerding Castor Hewitt, LLP, I couldn’t be more
enthusiastic to be a part of this legal team. What I find exceptional about this firm is that we
work as a team in order to provide our clients with outstanding
legal counsel.
While I practice mainly on the transactional
side of the law, working with clients on such...
Read More »
Here are some of the questions I
heard raised on the private placement offerings presented to an
angel investor group
last
Friday:
Read More »
I am back in
Irvine, California this week visiting with
two angel investor
groups. One of which invited me and my colleague, Sam
Schmutte, to attend their investors meeting this morning.
Yesterday, we had lunch with the two officers of this group.
We spent much of that time discussing the current economic climate
and its impact on investment opportunities.
In the wake of Madoff, economic stimulus earmarks, and AIG bonuses
the public’s trust of financial “experts” has been shattered.
This is...
Read More »
I just returned from a
conference in Scottsdale, AZ on raising private equity. While
my wife was off riding horses in sunny, 85 degree weather, I was in
an internal conference room with no windows refining my knowledge
of how to help clients raise capital through private placement
offerings while not committing securities fraud in the process.
That is how much I care about my clients!
Thankfully, I did get out in the sunshine on Friday afternoon as we
traveled to Sedona and on Saturday while...
Read More »
Does
your business need Search Engine Optimization (SEO)?
Yes!
Absolutely! If your business has a
pulse, you need Search Engine Optimization. SEO can add tremendous value to a business’
marketing efforts (this is even more true when tied with a good
analytics tool).
The more
appropriate question is where should your business spend money on
SEO. The core of my business law
practice is in working with small to medium size companies in
Indiana technology, software licensing and SaaS
markets. F...
Read More »
I
love Africa. I love it's rawness, beauty, the honesty of it's
hardship. It is opportunity that is constantly bashing heads
with turmoil.
There is an article in this month's
Harvard Business
Review entitled "Now's the Time to Invest in Africa". For
years I have been involved in building infrastructure in Africa and
promoting opportunities for business growth within the continent.
In 2008 my firm handled deals in South Africa, Zimbabwe,
Nigeria, Togo and Congo. In 2009 I expect to...
Read More »
A large part of my business law practice
consists of providing counsel to business owners on raising
capital. These clients are primarily new ventures in Indiana
technology, software licensing, SaaS law and real estate
fields. I assist these businesses in developing strategies
for private equity offerings, drafting private placement
memorandums and related investment documents and identifitying and
presenting the investment opportunties to private equity
investors.
It is about impossible to...
Read More »
December is always an exciting month for
entrepreneurial law attorneys. Most years December is my top
month for merger and acquisition deals, private placement offerings
and other business collaboration transactions. This past week
my firm closed two multi-million dollar acquisitions, one venture
capital transaction, and no less than five significant software
licensing deals for our clients. We also brought in three
more acquisition deals to finalize before the end of the
month. This is fun...
Read More »
This post continues on my two prior blog posts
regarding private equity raises (
Private
Equity I;
Private Equity II). In my
business
law practice, one of my jobs is to help clients raise capital
through selling securities which are exempt from SEC public company
filing requirements. The beauty of these exempt securities is
that the company can raise cash without taking on debt and without
having to comply with strenuous and costly SEC filing requirements
for public companies. The down sides...
Read More »
As a
business
law attorney I often get asked by clients who are doing private
equity raises if a Private Placement Memorandum (PPM) is
necessary. Let's face it - these are terrible documents that
do a poor job of casting a vision for the business, and investors
hate reading them as they are "overly lawyered" and thick in
regulation. I am of the opinion that the only reason a PPM
does not scare away investors is that most private equity investors
have seen a million PPMs in the past and have...
Read More »
Powered by Compendium