Articles in Private Equity

CHANGES IN CONVERTIBLE INSTRUMENTS FOR EARLY STAGE FINANCINGS

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There are currently two main types of convertible instruments that are in widespread use for pre-Series A and other “bridge” financings: convertible promissory notes and SAFEs (Simple Agreements for Future Equity). Each of which are alike in that the amounts invested under the applicable instrument convert into shares of the issuing company in question, upon the happening of certain events, Read More

SHOULD YOU CONSIDER A PHANTOM EQUITY PLAN?

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Whether you’re a brand-new startup or a veteran of several funding rounds, every emerging growth CEO wants to find the right path to incentivizing employees while conserving capital. One creative approach that might be right for you is a phantom equity plan. Phantom Equity – what is it? Phantom equity is essentially a cash bonus plan that is designed to Read More

China’s New Foreign Investment Law

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China’s new Foreign Investment Law is a major regulatory overhaul of foreign investment law in China. Effective 1 January 2020, the new law will repeal the existing joint venture (“JV“) laws and the wholly foreign owned entities (“WFOE”) law, and largely bring foreign investment under the same regime as governs domestic companies. However, in terms of practice, the new law Read More

2018/2019 Opportunities: Australian Business Acquisitions and Equity Investments

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Investor activity and economics in Australia 2018 and 2019 appear to be great years for overseas investment in Australian businesses. We are seeing a lot of overseas investor activity here. Against the US Dollar, the Australian Dollar (valued, at the time of writing, at 0.72 USD) has depreciated by over 10% since the end of January 2018 but it may Read More

Adviser Sanctioned for False Statements to Prospective Investors

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The Securities and Exchange Commission sanctioned a private equity fund adviser and its chief executive officer for making false statements about the other investors that had committed to invest in one of the adviser’s private equity funds. As part of a settlement with the SEC, the adviser agreed to cease acting as an investment adviser and its chief executive officer Read More

Attack of the Indirect Investor, Again

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A Texas-based retirement fund that does not own any Uber securities sued Uber and its former chief executive officer Travis Kalanick for making misleading statements to investors.1 The retirement fund claims that it was harmed when the value of its indirect investment in Uber fell after investors learned that Uber was “operating a business far different than what investors had Read More

Registration Exemptions for Investment Advisers

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A person who acts as an investment adviser must register with the appropriate regulatory authorities or qualify for a registration exemption. An investment adviser generally is any person who, for compensation, engages in the business of advising others as to the value of securities, or as to the advisability of investing in, purchasing, or selling securities. Two commonly relied upon Read More

The Risks of Using Finders and Unregistered Brokers

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The managers of private investment funds often use placement agents, finders, and other intermediaries to help raise capital for their investment funds. Before retaining an intermediary, however, fund managers should evaluate whether the intermediary is, or should be, registered as a broker-dealer with the Securities and Exchange Commission. Fund managers that use unregistered brokers expose themselves to significant legal liability Read More