Author name: pat

Can I Negotiate My Liquidation Preference on a Term Sheet?  The valuation looks great. You’re excited. You almost miss the liquidation preference clause buried three pages in. That clause determines who actually gets paid when the company exits. Miss it, and a $50M acquisition could result in investors being paid in full while founders receive significantly less than expected.  […]

Am I Losing My QSBS Exclusion Without Knowing It?  You have held the stock for five years. You expect to pay zero capital gains tax on the exit. But nobody confirmed that the company qualified at the time you invested. That one gap can potentially cost you the entire exclusion.  Section 1202 QSBS eligibility is primarily determined at the

Can a Foreign Investor Back My US Startup Without CFIUS Issues?  You are closing a round. The lead is international. The term sheet is signed. Then someone says the word CFIUS, and the timeline collapses.  This happens more often than founders expect. In many cases, it is preventable with early planning.  Missing CFIUS review can

What Is My MFN Clause Actually Worth?  You negotiated a most-favored-nation clause. You felt protected.  Then the company raised another round on better terms. Your MFN did not trigger, and you were not notified.  Most-favored-nation clauses in side letters and SAFEs give investors the right to adopt better terms offered to subsequent investors. The clause sounds strong. In practice, it

Can My Investors Force Me to Sell My Company?  You are not ready to sell.  The product is still evolving. The timing feels off.  But your lead investor disagrees. Buried in your stockholders’ agreement is a clause that may give them the right to force an exit you do not want, on terms you did not choose. It is called a

Congress Just Changed How Startups Can Raise Money. Are You Paying Attention?  You have been pitching at demo days, accelerator events, and university programs.  You probably assumed that was fine.  For years, the rules around general solicitation, meaning publicly promoting a fundraise to unverified investors, have created legal risk when founders raise capital in open settings under certain exemptions. A