Shareholder Issues

As tech founders and executives contemplate the possibility of exiting their companies, there are multiple factors they must consider. On May 3rd at FoleyTECH Chicago 2016, four seasoned entrepreneurs came together to discuss their different reasons for, approaches to and ideas about selling a company.

Many large corporations have set up, or are in the process of setting up, in-house venture funds. At the same time, early and later-stage companies are looking for “smart money” investors. Are corporate venture funds the perfect match?

Just as the universe of tech investors has changed, so, too, has the profile of potential acquirers. Big tech companies still drive much of the acquisition demand, but companies ranging from media and advertising to insurance and retail are now acquiring tech companies not only for their products, but also for an injection of creative spirit.

Nearly every founder or executive considers selling their company at one point or another.

Nearly every founder or executive considers selling their company at one point or another...

Nearly every founder or executive considers selling their company at one point or another.

With the increased attention paid to companies that feature public benefits or social impact as part of their mission or business plan and with the rise of social impact investors, more and more states are enacting public benefit corporation statutes (five will go effective this year).

Many first-time entrepreneurs have never participated in a formal board meeting. After an initial round of financing, regular board meetings become a reality.

Founders are often focused on maintaining at least 51% ownership of their companies. With 51%, they will be able to control the Company, and their destiny. At least that’s what they thought. In reality, the 51% control premium is often contracted away in the world of preferred stock venture financings.