Merger & Acquisitions

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As of recently there have been a vast amount of tech start-up corporations that have gone public. In addition, a number of the big-box retailers are consolidating. I am quite certain within the next few years our nation and emerging markets will see a spike within the M&A industry. 
A hostile take-over scenario that involves a merger or acquisition of a successful start-up technology corporation that is not in good financial standing: Acting as an attorney on behalf of the start-up corporation how would capital structure, articles of incorporation and future investments play a role in counseling the start-up. 

Assume that you and your partner want to start up a high-tech corporation; you have been advised to secure a patent or a copyright on your technology, but you and your partner have no liquid assets. You have located three very bright, wealthy and investment savvy-wise investors who are willing to join with you and invest substantial sums in your enterprise. How would you set up the capital structure using common stock, preferred stock, warrants, straight preferred, participating preferred, convertible preferred and different types of debt? Consideration should be given to the fact that after 5 or so years, assuming the enterprise is very successful, you and your partner want to own 100% of the business. you are a corporate, tax and securities lawyer, and your partner is content with that fact and you, assuming that no conflict arises, want to treat your partner fairly and equally, but you have no obligation, fiduciary or otherwise to the other 3 investors, but, thinking ahead, you would like to use the investors in other possible ventures and want them to be happy with anything you and your partner do. 

Sources: 
Mergers and Acquisitions (Aspen Casebook Series 3rd Edition) – Author “Maynard”

A Complete Introduction to Corporate Taxation – Authors “Reginald MomBrum” “Gail Levin Richmond” 

Takeovers, Restructuring, and Corporate Governance (4th Edition) Authors “J. Fred Weston” “Mark L. Mitchell” “J. Harold Mulherin”

 

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