In investing in a startup, venture capital firms issue letters of intent to define the basic structure of the proposed investment. This document, which addresses the most relevant aspects of the transaction, serves as the starting point for negotiations between the parties involved in executing the financing.
When a venture capital or private equity fund invests in a startup, it can negotiate preferred rights through the creation of classes of shares. This mechanism aligns interests and protects investments, optimizing returns and ensuring economic and governance privileges for the investor.
In an investment round of a startup, the shareholders usually sign an investment and/or a shareholders’ agreement to establish the guidelines for their arising relationship. Although the specifics may differ based on each company and its shareholders, these agreements usually contain some key clauses. In this article, Carla Rissmann provides an explanation of the content and purpose of these clauses.
Securing capital is vital for startup success, and funding round are pivotal. Clear objectives, meeting diverse investors, precise structuring, legal compliance, thorough due diligence, and transparent negotiation are crucial.
Mariscal Abogados advises the British distributor RFMW of radio frequency and microwave products on the acquisition transaction of the Spanish company Spantech Technology Solutions.
The use of representation and warranties insurance (R&W) is becoming more and more frequent in Spain in the field of the purchase and sale of companies. The premiums increase, costs reduction or process simplification are some of the reasons for their growth.
After carrying out the corresponding due diligence process to analyse the accounting, fiscal and legal situation of a business, it is vital to formalize the purchase and sale through the most appropriate legal instrument according to the characteristics of the project.
The main instruments for acquiring companies are the purchase and sale of shares and participations and the purchase and sale of company assets. The choice of each of them has its advantages and disadvantages, and entails different legal consequences.
Compared to 2013, in 2014, the number of mergers and acquisitions in Spain grew to 54%. The principle factors that have motivated this growth are the improvement of the economy and the increase of foreign investment in Spain. For 2015, this upward trend is expected to continue.
The process of due diligence in the context of a transfer, merger, sale or purchase of a company in Spain includes four phases in order to ensure its correct course: preliminary, investigation, confirmation of data and the transmission of the report.
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