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« EVDB: organizing the world's events | Main | How Many Appliances Do You Need? »

Mar 29, 2005

Comments

Randy Charles Morin

That puts a different perspective on the deal. A break even for investors, or do they gain somewhere else? Maybe reputation?

Ralph Clark

Jeff,

Execellent observation in the last paragraph. In fact it is very likely that no matter what the formal liquidation, participation etc terms where it likely got renegotiated in order to get the deal done. This is ofen the case when the consideration is not substantially greater than the total liquidation perferences.

Assuming management and more specifically employees are valued by the acquiror they most likely had some meaningful participation in the transaction. That participation would then be probably "vested" over a reasonable period of time ensuring the people associated with the IP and asset have incentive to stick around.

Also to your point, certain investors might carve back their consideration to juice up other pfd classes in order to get deal done without a lot of handwringing and negotiation which can sometimes kill a deal if there is too much infighting among investors.

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