A strength of the private equity M&A market has always been the willingness of private equity buyers to consider improvements in transaction structures and deal technology to address a seller's particular concerns and needs. Many recent public-to-private buyouts have faced criticism and challenges from shareholder groups, hedge funds and proxy advisory firms relating to the failure to provide the target's shareholders with an opportunity to participate in the future growth of the target under private equity management. The pending acquisition of Harman International Industries by KKR and Goldman Sachs Capital Partners serves as a possible middle ground, by offering Harman shareholders the opportunity to retain a minority interest while permitting the buyers to effectively take the company private.


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The exact terms upon which venture capital investments are made are not typically announced or publicized. If available, the terms of prior venture transactions would be of interest to startups and venture capitalists alike. For a group of founders starting a company, knowing what a particular venture investor is willing to do based on what the investor has in fact done in prior deals could prove to be extremely valuable information. Likewise, a prospective venture investor could stand to gain an advantage relative to a competitor, especially in competitive bid situations, if the investor were aware of the competitor’s deal terms inclinations based again on actual deals done in the past. Pre-money valuations for prior deals are of particular interest as valuation is often the starting point for in a venture capital negotiation. Also of interest are the other primary economic terms of the venture deal—liquidation preference, dividend rates and option pool size, to name a few—each of which can have a significant impact on the return to the common and preferred stockholders.


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Since our last meeting, the Listserve has been very active. Among the discussions was a vigorous back and forth regarding founder indemnification. The discussion was kicked off by Andrew Hoyne on March 2 with the following post:

" . . . do you ever see situations where founders of a VC-backed company personally (not as a corporate officer) rep and warrant the condition of the company as part of the venture financing, and personally agree to jointly and severally with the company indemnify the claims of investors for breaches of such reps? I am not concerned with a start-up . . . but instead am interested in your comments re a later stage financing round."

Andrew received a number of detailed responses, with answers falling on both sides - with some differences apparently based on geography and company side v. investor side representation.


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A comprehensive overview of Venture Capital industry data and trends for the United States and Europe, organized by industry, by rounds, and by regions and including valuation, liquidity, M&A and IPO statistics and trends.


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A summary review of deal terms, including financing rounds, price change, magnitude of price change (or barometer), liquidation preference, multiple liquidation preferences, participation in liquidation, cumulative dividends, antidilution provisions, pay to play provisions, redemption, and corporate reorganization. For companies headquarted in the San Francisco Bay Area.


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From the European Private Equity and Venture Capital Association Yearbook 2007 by EVCA/Thomson Financial/Pricewaterhouse Coopers


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