Best Legal Practices BEFORE Raising Capital

I get it. You’re excited because you and your team have finally decided its time to raise capital and expand and grow your business. But remember that once you make that decision to raise capital in exchange for equity or debt, you are entering the world of securities law—and it is NOT to be tested.

Take a look at my latest powerpoint presentation to get the best legal practices as you decide to enter a capital fundraising campaign. REMEMBER, the BEST way to avoid any legal mishaps is to secure a great securities/private equity attorney. That’s what we do and we are always here to help.


NOTE: I will be discussing this subject in detail during my “Power Raisers” weekly conference call this Monday (September 28th) at 11 am EST. Visit the News & Events section of my website for more information.


  1. Best Legal Practices When Raising Capital: BEFORE you raise DAR’SHUN KENDRICK, ESQ./MBA KENDRICK LAW PRACTICE (678) 739-8109 DKENDRICK@KENDRICKLAW.NET
  2. Who are We? We provide LEGAL COMPLIANCE for companies seeking to raise $250,000 or more in private equity. We do NOT find investors or other sources of capital as it violates securities laws. For more information, check out our Slidedeck on The New KLP. Kendrick Law Practice * (678) 739-8109 *
  3. How can you avoid ALL of the following legal pitfalls in this presentation? Hire knowledgeable legal counsel AS SOON AS you know you want to raise capital. Kendrick Law Practice * (678) 739-8109 *
  4. 1- Do not “generally solicit” investors. Most private offerings prohibit generally solicitations. What does that mean? It can mean LOTS of things as there is no general definition but the S.E.C. has come up with a set of guidelines for what a “general solicitation” could mean. It includes, but is not limited to, solicitations online. Legal Counsel will help you make sure you do not run afoul of federal securities law. Kendrick Law Practice * (678) 739-8109 *
  5. 2- Do not pay employees commissions for help raising capital. Unless your employees are “broker-dealers” as defined under the Securities Act, securities laws prohibit payment to anyone of a commission or other success based compensation in connection with the sale of securities. This isn’t the only definition or interpretation of a “broker-dealer”. Consult legal counsel about fee sharing and splitting. Kendrick Law Practice * (678) 739-8109 *
  6. 3- Do focus on the management team. Raising capital should not distract from building the BEST management team to run the business while and after you raise capital. Your attorney is especially important because this is the person who will make sure you stay out of legal troubles throughout and after this process. Kendrick Law Practice * (678) 739-8109 *
  7. 4- Consider merging with another company to scale. One way to scale a business is to merge with an existing business. But M & A (mergers and acquisitions) can be pretty tricky. Make sure you do it the legal way so your understanding of what the surviving company looks like is in line with the M & A paperwork. Kendrick Law Practice * (678) 739-8109 *
  8. 5- Choose your capital funding method wisely then stick to it. There are many options to raising private equity and some methods get a little creative. Consider all your fundraising options before choosing which course to pursue legally and then make sure you strictly comply with it! Failure to strictly comply with a private placement requirement could jeopardize your entire offering. Kendrick Law Practice * (678) 739-8109 *
  9. 6- Ask questions BEFORE there is a problem. When you are raising capital, there is a lot going on and a lot of questions that will need to be asked of professionals you are working with on this goal. Don’t be afraid to ask questions the second you think of them; it will save you headache and money in the long run. Good professionals will answer most of your questions before they are even asked, including a great attorney. Kendrick Law Practice * (678) 739-8109 *
  10. 7- Do not sell to the wrong investors. Not all investors are created equally. Making the decision about what investors to partner with can be crucial to your business success. Consult your management team, especially your attorney, for guidance in making this important decision. It is a mistake to automatically partner with EVERYONE that wants to give your company money. This is very much a partnership that should be treated as such. Kendrick Law Practice * (678) 739-8109 *
  11. 8- Do have a well thought out business plan. This should be self explanatory. Both from a business and legal perspective, a business plan should be a requirement before you begin to raise capital. But note that private placement offerings are still subject to federal anti-fraud provisions so your business plan must be free from misrepresentations and fully disclose “material” information. Your attorney can help you through the process of finalizing your business plan for distribution. Kendrick Law Practice * (678) 739-8109 *
  12. 9- Raise enough money! You’d be surprised how many companies do not raise enough capital to adequately finance operations for a period of time before profit and find themselves raising ANOTHER round of financing shortly after the last. Be realistic but make sure you have a solid number before soliciting investors or you could find yourself going through another fundraising campaign again, taking valuable time away from growing your business. Kendrick Law Practice * (678) 739-8109 *
  13. 10- Don’t even TRY to play a securities lawyer. Even attorneys can’t play securities attorneys. Securities law is a complex, often confusing, area of law that should be left up to individuals who practice this on a daily basis. Your focus should be on preparing to raise capital and NOT legal compliance. Let someone handle that for you. Kendrick Law Practice *(678) 739-8109 *
  14. Don’t want to worry about ANY of this? Hire an attorney. (678) 739-8109 Book a FREE 15 minute services consultation HERE Sign Up for Our Enewsletter HERE Let’s talk about strategic partnerships HERE Kendrick Law Practice * (678) 739-8109 *



I am Dar’shun Kendrick, Private Equity Attorney and Owner of Kendrick Law Practicehelping businesses raise capital the LEGAL way. We work with “for profit” companies seeking to raise $250,000 or more through private equity that have a line item budgeted for legal services. I have 2 B.A.s from Oglethorpe University, a law degree from the University of Georgia and an M.B.A. from Kennesaw State University. NOTE: I will be discussing this subject in detail during my “Power Raisers” weekly conference call this Monday (September 28th) at 11 am EST. Visit the News & Events section of my website for more information.

We are ONLY authorized to practice law in Georgia and therefore any legal advice in this blog only pertains to Georgia based businesses. Please visit us online to sign up for a time to discuss services or for our famous 10 point Business Legal Consultation for 1 hour.

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Filed under business law, capital raising, entrepreneurship, investor relations, private equity, securities

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