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Five Mistakes Entrepreneurs Make in Dealmaking – Part I
by Scott Edward Walker on September 29th, 2009I’ve been doing deals as a corporate attorney for over 15 years, including nearly eight years in the trenches at two major law firms in New York City; and during that period, I have seen certain mistakes made by entrepreneurs (and inexperienced deal guys) over and over again. The purpose of this post (which is part I of a series) is to discuss the following five basic mistakes made by entrepreneurs in connection with corporate transactions: (1) the failure to diligence the guys on the other side of the table; (2) the failure to build a strong transaction team; (3) the failure to run the negotiations through the lawyers; (4) the failure to check their emotions and to remain disciplined; and (5) blinking first. The video version of this post is set forth immediately below.
Launching A Venture: Ten Tips For Entrepreneurs
by Scott Edward Walker on September 15th, 2009Below are ten tips for entrepreneurs who are launching a startup that will seek venture capital (“VC”) financing.
1. Protect Yourself from Personal Liability. The entrepreneur’s first step in connection with launching a startup should be to form an entity that will protect against personal liability. As discussed below, a Delaware C-corporation is generally the recommended choice; however, in certain rare circumstances, it may be prudent for the entrepreneur to form an S-corporation or a limited liability company to obtain “pass-through” tax treatment (and then convert the entity to a C-corporation down the road, if necessary). The bottom line is that the entrepreneur should seek the advice of corporate and tax counsel in connection with the formation of any business organization (e.g., shareholders in S-corporations — as opposed to C-corporations — are not eligible for the “qualified small business stock” capital gains tax break; and losses in C-corporations may be deductible up to $50,000/yr. or $100,000/yr. on a joint return with respect to “Section 1244 stock”). (more…)