How Much Money Is Available for a Company to Increase Value?

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A million dollars is kind of the minimum you know particularly if you're dealing with founders yeah. The conversations I hear in the back channel is hey enough to buy a house huh but maybe not too much to maybe if you're getting a little frisky, he says. There was a transaction that occurred where somebody sold 200 million for a company that is now worth less than 200 million and that just went right to a personal bank account. You have to get concerned as an employee as a board is you know do we should we have this inside the company wouldn't that be a better use for these proceeds? He says there's a number of different considerations that come into play when looking at liquidity transactions

Today’s show:

Wilson Sonsini Partner Becki DeGraw joins Jason to kick off another series of Startup Legal Basics! In this episode, they break down secondary market transactions, including the evolution of secondaries (00:50), trends in the industry (3:16), critical aspects of Qualified Small Business (QSBS) stock(20:06), and much more!

Time stamps:

(00:00) Wilson Sonsini Partner Becki DeGraw joins Jason (00:50) The increased use of secondary markets (3:16) How companies staying private longer influenced the rise in secondaries (4:25) Determining how much founders should be allowed to sell (6:21) Spending more than a company is worth (9:26) The Pari-Passu concept explained and how it applies to early investors, founders, and employees (10:38) Who gets to sell pre-IPO (12:44) Off the cap table transactions and hypothetical scenarios (18:26) Tender offers and the NASDAQ secondary market (20:06) The critical aspects of qualified small business (QSBS) stock

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