LLCs and Convertible Debt – Too Good to be True?

Guest post by Scott J. Pinarchick, William J. Bussiere, Jr. of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Founders choosing a structure for their business are often drawn to the limited liability company, or LLC, for its overall flexibility in both taxation and governance matters. And founders seeking access to early capital, not to mention seed investors themselves, are often drawn to the convertible note as a simple, less expensive means to raise funds. But LLCs and convertible debt don’t always mix. LLCs are generally treated as partnerships for federal income tax purposes and the rules regarding debt in a partnership are different than that of a corporation.  LLC members should be aware of the risks associated with the issuance of debt instruments and when such debt is repaid, converted, assumed or discharged.

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Dual-Track Processes: How to Turbocharge Your Exit

Guest post by Michal Berkner, Josh Kaufman, James Foster from Cooley M&A blog

Exiting an investment is an inherently uncertain process. Even for a thriving business with a viable equity story, committed stakeholders and the right advisers, the final deal terms and valuation are typically guided by factors beyond a company’s control. These include prevailing market sentiment, current appetite for acquisitions in a particular sector and the political and economic environment, all of which can change well within a given transaction timetable. In the face of a global economic slowdown, ongoing trade wars, Brexit, heightened market volatility and other sources of uncertainty, it is becoming increasingly important to consider how deals can be run to maximize transaction certainty and achieve optimal valuation.

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