Category Archives: investor relations

Private Equity Trends: Data makes the world go ’round.

hh…private equity. I call it “capital purgatory” since, in my experience working with capital raising clients, it’s easier to obtain private equity than venture capital but harder to obtain than an angel investment and therefore—-companies are in an unknown, in between stage between possibly getting enough capital to scale and grow their business and just enough investment from a wealth individual to continue bootstrapping their efforts for growth. Therefore, in my opinion, I secretly refer to private equity (PE) as “capital purgatory”.

As you probably know, private equity is a system by which a fund is managed by a general partner who use a variety of investment strategies (buy outs, mezzanine financing, venture capital, leverage buyouts (LBOs)) to invest in companies that in turn make money to pay out profits to limited partners, those being the investors into the fund. Generally the limited partners (LPs) like to see their investment return in 7-10 years. If you are a visual person like me, here is a handy chart for reference:

(Source: Wikipedia, last accessed 10/24/16)

Although I am but a humble lawyer, I will tell you the allure and fascination of analytical information for private equity astounds even my husband John Jackson, who is the numbers, analytical, “this is what this data means” person in our family. Data is vital to the world as we know it and particularly helpful in identifying trends, making investment decisions, and assessing any given situation. Consider these points about the U.S. private equity industry: (Credits: My favorite- Pitchbook, last accessed 10/24/16)

  • 2016 may see the LEAST amount of PE investment since 2006, (2009 as the exception/outlier of course) with only 2,477 deals totaling only $484 Billion raised. (Source: Pitchbook, page 5)
  • In 2016, buy-outs are down to the lowest since 2006 and platform creation is up. (Source: Id. at page 6)
  • Company valuations are on the rise as 2016 saw valuations in multiples of 5 of EBITDA [Earning Before Interest, Taxes, Depreciation and Amortization] (Source: Id. at page 7)
  • Median debt [of companies in PE portfolio] is down by almost 8 percentage points since 2010. (Source: Id.)
  • Deals over $1B make up the majority of deals in 2016. (Source: Id. at page 9) That’s a lot of unicorns—thanks Uber and Airbnb
  • IT (surprise, surprise) continued to obtain a majority of PE funds in 2016. (Source: Id.)
  • The overall value of funds dropped in Q3 of 2016 despite having a robust Q2. (Source: Id. at page 14)

And on…and on…..there was much data to be digested in the 20 pages of data. But the point is the world of PE is a fascinating world that, in my opinion, is partially data driven (what industries are trending? what has been their performance record?) and partially human psychology (who will win the U.S. elections? what effect may that have on my investments? do I “like” this company?). By taking a look at the past trends and, to some extent, projections, you can make your own assessment as an investor or a company which direction you should go.

 

*********************************************************************

I am Dar’shun Kendrick, Private Securities 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 capital (including crowdfunding) that have a line item budgeted for legal services. We do NOT find investors or introduce companies to investors; that is the job of “broker-dealers” and we are prohibited under federal securities law from doing so.  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. View past and upcoming speaking engagements and request me to speak to your organization. I have been elected to the Georgia House of Representatives (East DeKalb/South Gwinnett) since 2011 and I serve on Juvenile Justice, Judiciary Non-Civil and as the ranking Democrat on the Small Business and Job Creation Committee.

You may be interested in my non-profit organization as well to EDUCATE and EMPOWER minorities: Minority Access to Capital, Inc.

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 1 hour consultation.

Follow us on social media:  

LinkedIn Company Page

Twitter

Facebook

Blog

Instagram

Slideshare

 

Leave a comment

Filed under capital raising, investor relations

PRESS RELEASE: 2nd Hearing of the GA House Ad Hoc Committee on Investment Policy in Georgia (May 26th)

This is a manifestation of a blog I wrote at the end of last year on LinkedIn- Politics & Policy: How It Affects Your Access to Capital. As an elected official, I am constantly encouraging individuals to get involved in the policy making process as much as possible–policy affects your life more than you know it and those around you. But now I am urging businesses, who are made up of individuals, to get involved in the process as well. Remember that voting is the BARE minimum that you can do to get involved in the decision making process that affects that lives of millions of Americans.

As a member of the Georgia House of Representatives, I am able to directly influence the process of policy making. I decided to focus on private investing policy as my summer project given my background and passion for securities and capital markets. I serve on an ad hoc committee made up of my colleagues in the House and we are holding public hearings to listen to Georgia residents and investors to explore Georgia’s investment policy. You can review notes from our first hearing HERE. It was a good first step but there is still much to learn and do.

Well, we are on the move and have set a 2nd hearing that I hope you can all join us in attending. (Download PRESS RELEASE and share!)

I hope to see some of you there! If you’d like to be added to future announcements of hearings and events, please email dkendrick@kendrickforgeorgia.com, Subject: Private Investment Policy in GA.

**************************************************************************

I am Dar’shun Kendrick, Private Securities 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 capital (including crowdfunding) that have a line item budgeted for legal services. I have served in the Georgia House of Representatives since 2011, representing over 54,000 Georgians in East DeKalb and South Gwinnett. I serve on the Juvenile Justice, Judiciary Non-Civil (Criminal Law) and ranking Democrat on the Small Business Development & Job Creation committee.  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. View past and upcoming speaking engagements and request me to speak to your organization.

You may be interested in my non-profit organization as well to EDUCATE and EMPOWER minorities:

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 1 hour consultation.

Follow us on social media:  

LinkedIn Company Page
Twitter
Facebook
Blog
Instagram
Slideshare

Leave a comment

Filed under entrepreneur, Georgia, investor, investor relations

The Future of Private Investing in Georgia: Fitting All the Pieces Together

Last week, on March 31st, I was honored to chair my first ad hoc committee meeting of the Georgia House of Representatives, where I have served since 2011. As a member of the minority party, you can imagine how many times I get the opportunity to chair a meeting but this is a space where I am not only comfortable, but possess a particular expertise in this subject matter: private capital. This is what I do….help companies with the legal compliance and agreements needed for successful capital raises and keep the S.E.C. and state governments off their back.

This ad hoc committee came out of an idea I had the last few days of the 2016 Georgia legislative session in which I saw the need to have a series of public hearings to discuss private investing in Georgia and how to make it easier to invest in Georgia. My first thoughts were just to update the existing Georgia securities code, which have not been updated since 2008 since there are various federal laws and regulations that have been passed in recent months. But then  I decided that since I am going to open the Georgia securities code, I may as well take testimony and hear some innovative ways to move private capital into Georgia (and away from neighboring states but shhhh…don’t tell them I said that.) You see…it all works together…the securities code…the regulations from the Securities and Exchange Commission…rules and regulations from the GA Secretary of State..the state budget. Everything works together and we didn’t need any missing pieces to this puzzle of encouraging capital investments in Georgia. So I wanted to make sure that didn’t happen….and I’m on a one woman mission to make sure that doesn’t happen as you can see from my upcoming speaking schedule.

Being the stubborn lawyer-legislator that I am, I decided to approach the Chair of the Small Business Development and Job Creation committee Chairman Bubber Epps where I serve as the ranking Democrat on that committee. I also approached the Chair of the Economic Development & Tourism committee Chairman Ron Stephens. These seemed like the most logical committees to ask to go down this complex road of capital investments in Georgia and luckily, they both agreed that it was a good idea and agreed to let me chair the meeting since this is the type of work I do for my “day job”. So an ad hoc committee was appointed from these two committees that included the brightest minds in the Georgia House: Reps. Stacey Evans, Buzz Brockway, Steve Tarvin, Al Williamsmyself, and Chairmen Ron Stephens and Bubber Epps.

The Gwinnett Chamber of Commerce hosted the first public hearing of this ad hoc committee. I choose the Gwinnett Chamber because I not only represent South Gwinnett but the Gwinnett Chamber has been an innovative organization committed to developing the whole entrepreneur (see flyer to left). I’m happy they were able to partner with us for this important topic.

And so we met last week at the beautiful building in Duluth that houses the Gwinnett Chamber of Commerce and the public hearing lasted about 1.5 hours as we discussed everything from intrastate crowdfunding, updating the Georgia securities code, investments through the university system, etc. The room was filled with those that were interested in private capital, those that had invested their own private capital into businesses, those seeking private capital and those that regulate (the Secretary of State’s Securities Division) and legislative private capital (members of the committee).

The Gwinnett Post wrote a brief overview of the hearing in this article that was posted a day later. Below are some specific highlights/bullet points from the hearing and you can also view the YouTube video I uploaded to my YouTube channel (feel free to subscribe to my channel.)

  • From Noula Zaharis, the Secretary of State’s Securities Division: Georgia has some of the most “reasonable” fees in the nation, has one of the simplest processes for intrastate crowdfunding (a 2 page form), and in October of 2015, raised the Invest Georgia Exemption from $1MM to $5MM.
  • From Dan King, Member of Gwinnett Tech Angels, an affiliate of Atlanta Tech Angels: One possible reason why only 2% of the angel investor tax credit is being used is because of the number of companies that qualify and take advantage of the tax credit for its investors, for example a $1MM raise is the cap for company qualification; the average deal for a company depends on many factors but can range anywhere between $1-$1.5MM (in response to my question about the Invest Georgia Fund which is scheduled to be allocated $100M up to FY 2018 but currently only has $10MM in funding)
  • From Heather Maxfield with Technology Association of Georgia: The SBIR Program (Congressional Fund) is matched in other states and Georgia should seriously consider doing the same.
  • From Delray Wannemacher of First Look Equities: His company is looking for qualifies companies; portals are required for federal crowdfunding but not for IGE.

If you are interested in this subject matter and want to be on the list for our next public hearing, please email me atdkendrick@kendrickforgeorgia.com, SUBJECT: Private Investing in Georgia. Stay tuned as we come up with GREAT opportunities to invest in Georgia!

***************************************************************************

I am Dar’shun Kendrick, Private Securities 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 securities (equity and/or debt) that have a line item budgeted for legal services. We do NOT find investors or introduce companies to investors; that is the job of “broker-dealers” and we are prohibited under federal securities law from doing so.  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. View past and upcomingspeaking engagements and request me to speak to your organization.

You may be interested in my non-profit organization as well to EDUCATE and EMPOWER minorities:

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 1 hour consultation.

Follow us on social media:  

LinkedIn Company Page
Twitter
Facebook
Blog
Instagram
Slideshare

Periscope- Search “Kendrick Law” (interactive live videos)

Leave a comment

Filed under entrepreneurship, Georgia, Georgia law, investor relations, policy, private debt, private equity, securities

Choosing the Right Investors For Your Business

Minority Access to Capital, Inc. (MATC) had a GREAT general body meeting on March 10th, 2016 with partners J.R. McNair of Strongbox West and Gregg with Allstate. (Pictured above). If you missed the meeting, here are the audio notes and the powerpoint is below. Topic: Choosing the Right Investors For Your Business.


Text of Presentation:

  1. 1. CHOOSINGTHE RIGHT INVESTORS FORYOUR BUSINESS Prepared Specifically For: Minority ATC (Access to Capital), Inc. March 10th, 2016 Dar’shun Kendrick, Esq./MBA Kendrick Law Practice, LLC
  2. 2. About Me  Started Kendrick Law Practice in January of 2010  Boutique law firm focused on private securities (legal compliance for companies raising private capital)  2 B.As (Oglethorpe University), J.D. (University of GA), M.B.A. (Kennesaw State)  FINRA Non-Public Arbitrator  Follow me on social media
  3. 3. DISCLAIMER: This presentation does not create an attorney-client relationship nor will specific legal advice be given. Furthermore, this presentation does NOT include all the laws, rules and regulations required for a proper and legal private placement offering. Please consult a knowledgeable securities attorney before making a solicitation to an investor.
  4. 4. The Numbers • $17.B in angel investing in 2009 to 57,255 businesses • $4B inVC funding in 1982  Almost $300B in 2007 • $1.6T in private equity overall from 2000-2009 • Quarter before last saw MOST private equity investment in a quarter since early 2000s
  5. 5. What is private capital? • Hedge funds • Venture Capital • Leveraged Buy outs • Angel investors • F & F • Convertible notes
  6. 6. What is NOT private capital? • Rewards based crowdfunding • Grants • Publicly held companies • Traditional loans
  7. 7. Ways to Raise $$Through an Exemption • Mini-IPO (Regulation A+) of $20- $50MM • Regulation D (3 rules) • Equity based crowdfunding
  8. 8. Not all investors are created equal!
  9. 9. 2 Important, Non Exclusive Factors RE: Investors Type of Capital Raise • Some exemptions will limit the NUMBER of “unaccredited investors” you can raise money from • Some exemptions will limit the WAY (no “general solicitation”) in which you raise • Some exemptions will limit RE-SALE in and of the secondary market • Some exemptions will limit the AMOUNT of money raise • Some exemptions will limit the LOCATION of those you raise money from Type of Relationship • Rule ofThumb: If you wouldn’t have dinner with the investor, don’t go into business with them.
  10. 10. Types of Investors • Institutional Investors (Morgan Stanley, SunTrust Rob Humph, Citibank, etc.) [$100M +] • Venture Capital Firms [$1M+; 10 year partnership; high return and usually “high growth” industries and preferred equity rights] • Angel investors [$2,500+; lesser restrictions on high growth and return; typically individuals or small groups]
  11. 11. So CAN YOU and SHOULDYOU just start raising money (in exchange for equity) from investors, including family and friends?
  12. 12. PIECE OF ADVICE Hire a knowledgeable securities attorney who will be able to guide you through the LEGAL COMPLIANCE and BUSINESS DECISIONS of who to go to dinner with for 6 months- 1 year.
  13. 13. Pitfalls • Corporate form set up has to be specific and in a certain order • “Time triggers” for solicitation • Agreements that you will need to have to investors (limit on the secondary market, unregistered security disclaimer, risk disclaimer, PPM, etc.) • Financials required to be provided to investors • Founder protections to be discussed (Dilution and bad math caused a company who thought they owned 66% of a company to go down to less than 10%) • M & A strategy needed for an exemption that allows for “general advertising” under a Reg. D exemption • State “blue sky laws” requirements • REMINDER: The S.E.C. can recommend CRIMINAL PROSECUTION to the Department of Justice, like the I.R.S.
  14. 14. Thank you! Dar’shun Kendrick, Esq./MBA Kendrick Law Practice http://www.kendricklaw.net(678) 739-8109 Find us on social media

JOIN US AT OUR NEXT MEETING!


***************************************************************************

I am Dar’shun Kendrick, Private Securities 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 securities (equity and/or debt) that have a line item budgeted for legal services. We do NOT find investors or introduce companies to investors; that is the job of “broker-dealers” and we are prohibited under federal securities law from doing so.  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.

Leave a comment

Filed under capital raising, investor, investor relations, private debt, private equity

The New Regulation A +: What Is It and Does It Deserve an A+?

Regulation A has been described by industry experts as a “mini IPO” (initial public offering). Shares are not publicly traded but the requirements to raise capital under Regulation A is very similar to a full blow initial public offering that many issuers (companies) specifically avoid because of the high regulation and costs.

What is Regulation A +?

On March 25, 2015, the Securities & Exchange Commission (S.E.C.) adopted final rules to encourage and direct smaller companies’ access to capital through Regulation A. These new rules are often referred to as “Regulation A+”. But does it deserve the grade of A+?

The new rules update and expand Regulation A, which is an existing exemption from registration from smaller issuers of securities. These rules are a result of the 2012 passage of the “Jump Start Our Businesses” Act (JOBS Act). Here is a general breakdown of the new regulations which are divided into 2 tiers and allows smaller companies to offer and raise up to $50M of securities in a 12 month period, subject to eligibility, disclosure and reporting requirements.

2 Types of Exemptions

Tier 1 (Offer up to $20M in a 12 month period)

  • Not more than $6M in sales can be to security-holders who are affiliates of the issuer
  • Subject to federal and state registration and qualification requirements

Tier 2 (Offer up t $50M in a 12 month period)

  • Not more than $15M in sales can be to security-holders who are affiliates of the issuer
  • Subject to additional disclosure and ongoing reporting requirements, including providing audited financial statements, and annual (10K), semi annual (10Q) and current event (8K) reports.
  • Preemption of state securities law registration
  • Qualification requirements for securities offered or sold ot “qualified purchasers”
  • A limitation on the amount of securities non-accredited investors can purchase in a Tier 2 offering of no more than 10% of the greater of the investors’s annual income or net worth
  • Exempt securities from the mandatory registration requirements of Exchange Act Section 12(g) if the issuer meets certain conditions.

In addition,  the exemption is limited to companies organized in and with their principal place of business in the United States or Canada. The exemption would not be available to certain other companies listed under the Rule.

Does the new Reg. A get an “A+?”

That remains to be seen. The rules were just passed March of this year and only became effective 60 days from the date of that S.E.C. publication so the end of June. The time period to raise funds is 1 year so June of 2016 hopefully we will have data to support the original intentions of adopted a new Regulation A—to improve access to capital for larger amounts for smaller companies.

I imagine that the most attractive of these 2 exemptions will be Tier 2 since it is exempt from state “blue sky laws” IF the issuing company is doing a raise in multiple states over $20M. But if its more cost effective for an issuing company to raise capital in a few states, comply with state laws, to avoid the on going reporting and disclosure requirements of Tier 2, that may be a better option. Each situation is different and should have the advice of counsel and a good accountant.

NOTE: I will be discussing this subject in detail during my “Power Raisers” weekly conference call this Monday (Oct. 26th) at 11 am EST. Visit the News & Events section of my website for more information.

***************************************************************************

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 or debt that have a line item budgeted for legal services. We do NOT find investors or introduce companies to investors; that is the job of “broker-dealers” and we are prohibited under federal securities law from doing so.  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 (Oct. 26th) 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.

Follow us on social media:  

LinkedIn Company Page
Twitter
Facebook
Blog
Instagram
Slideshare

Leave a comment

Filed under investor, investor relations, private debt, private equity, securities

Best Legal Practices AFTER You Raise Capital

Whew! You have completed your strenuous capital raising campaign and now you have cash, you have a new set of partners, and you are ready to scale your business. Well—not so fast! Remember that there are still on going legal compliance measures that must be taken to ensure that you are operating legally for the sake of your business, stakeholders, yourself and your employees.

REMEMBER, you can avoid having to worry about any of this by securing knowledgeable legal counsel to take that burden away from you.

 

TRANSCRIPT

  1. Best Legal Practices When Raising Capital: AFTER 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 * http://www.kendricklaw.net
  3. How can you avoid ALL of the following? Hire competent legal counsel AS SOON AS you know you want to raise private equity Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  4. 1- Find alternatives to investors who want to invest. There are various options for investors who want to invest in your company after you have reached your capital raising goal (remember that there are limits to how much money you can raise in 12 months). You can give them a place in the next round, for example. Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  5. 2- Consider the “WHO” you do business with. Not everyone is meant to have an involvement with your company before, during and after you have raised capital funds. Consider not only the professional accomplishments of individuals and institutions you do business with but also their personality. Documents can be drafted so that the company can use the professional accomplishments and decrease the personal flaws of investors. Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  6. 3- Be patient. It’s understandable that companies want to raise money and they want to raise it relatively quickly to start growing their business. However, you don’t want to seem too hasty in your dealings with investors and others. A company will come off as desperate if the sense of urgency is too much. Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  7. 4- Be honest about your limitations. This applies BEFORE and DURING the capital raising process as well. As with everyone, be honest about the limitations of the company and the management team. This is especially true before you are securing capital but also during and after the process to limit expectations and develop honesty with your investors. Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  8. 6- Get OUT if you need to get OUT. Staying in a bad business relationship with investors or founders is bad, if not worse, than staying in a bad marriage. Once you see signs that you need to depart ways, make sure you have legal counsel ready to do it the RIGHT and LEGAL way. But do it FAST to stop the bleeding. Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  9. 7- Stay realistic on your future options. Just run your business and create value for the investors. Running the company with the “hope” that you will be bought out may be a recipe for disaster, although nothing is wrong with having that as a goal. Deliver what you can and the options will present themselves in time. Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  10. 8- Limit your investors and lenders. You know the saying: “Too many cooks in the kitchen spoils the soup.” Same concept. Although there are laws that now allow for crowdfunding, it may be more strategic to raise capital from a few strategic investors as opposed to many. There is a lot of accounting and relationships to keep up the more investors you have when you should be focused on running your business. Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  11. 9- Reach out to your lawyer for additional help. This is NOT the end for legal compliance. Make sure you continue to retain and reach out to your lawyer to deal with lingering legal issues and any on-going compliance and reporting issues your company has with federal and/or state agencies. Kendrick Law Practice * (678) 739-8109 * http://www.kendricklaw.net
  12. Don’t want to worry about ANY of this? Hire an attorney. dkendrick@kendricklaw.net (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 * http://www.kendricklaw.net

NOTE: I will be discussing this subject in detail during my “Power Raisers” weekly conference call this Monday (Oct. 12th) at 11 am EST. Visit the News & Events section of my website for more information.***************************************************************************

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 (Oct. 12th) 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.

Follow us on social media:  

LinkedIn Company Page
Twitter
Facebook
Blog
Instagram
Slideshare

Leave a comment

Filed under investor, investor relations, private equity, securities

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.

TRANSCRIPT

  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  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 * http://www.kendricklaw.net
  14. Don’t want to worry about ANY of this? Hire an attorney. dkendrick@kendricklaw.net (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 * www.kendricklaw.net

 

***************************************************************************

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.

Follow us on social media:  

LinkedIn Company Page
Twitter
Facebook
Blog
Instagram
Slideshare

Leave a comment

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