The Venture Alley - A blog about business and legal issues important to entrepreneurs, startups, venture capitalists and angel investors.

CONTRIBUTED BY Kevin Criddlekevin.criddle@dlapiper.com    Anthony Kappusanthony.kappus@dlapiper.com One of the key considerations in structuring merger and acquisition (M&A) transactions is determining which contracts of the target company, if any, will remain in effect for the acquiror following closing.  This post will briefly outline: (1) the general rules of contract assignment; (2) the effect of anti-assignment clauses and other exceptions to the general rule of assignability; and (3) the effect of four common M&A structures on contract assignment. General Rule: Contracts are Freely Assignable The general rule is that contracts are freely assignable unless the contract itself, a statute, or public... More

CONTRIBUTED BY: John Reed and Anthony Kappus Many existing and startup corporations are considering adding forum-selection provisions to their governing documents requiring shareholder derivative and other intra-corporate lawsuits to be filed with courts in a specified location, or “venue,” often naming the Delaware Court of Chancery as the sole court in which such actions may be filed.  The issue has been the subject of much discussion since the March 2010 Delaware Court of Chancery opinion in In re Revlon, Inc. Shareholders Litigation, suggesting in dicta that corporations are free to adopt charter amendments that designate the jurisdiction for litigation of intra-corporate... More

CONTRIBUTED BYAnthony Kappusanthony.kappus@dlapiper.com This installment of our series Understanding VC Financing examines liquidation preferences.  Along with dividend rights, conversion rights, and anti‑dilution provisions, liquidation preferences are an essential economic term of the preferred stock typically sold in a VC financing. Liquidation preferences govern how a company allocates and distributes the proceeds from a sale, merger, dissolution, or other liquidation event.  The liquidation preference entitles holders of preferred stock to receive distributions of proceeds from an exit transaction before holders of common stock and other series of preferred stock with a lower preference priority and, in certain cases, entitles preferred... More