by Glenn Matthews on October 8, 2009
It has become increasingly important for private equity firms to include drag-along rights in their standard term sheets and investment documents. Drag-along rights can provide private equity firms with an important exit strategy.
What are drag-along and tag-along rights, and what do they do? Both are clauses included within a shareholder’s agreement (and often in investors term-sheets). A drag-along right (also referred to as drag-along clause or bring-along provision) provides an up-front agreement for all shareholders to participate in a sale of shares to a third party. Say for example a third party offers to buy out a company and the majority shareholders wish to accept the deal. A drag-along right will ensure that minority shareholders accept the buy-out and in essence they are dragged into accepting the deal and at the terms negotiated by the majority shareholder. Often the majority is set at 75%, however companies can set the threshold that suits them.
by Glenn Matthews on September 30, 2009
I don’t have a problem with making mistakes. In an entrepreneur’s life mistakes are life lessons. In only recent years have colleges and universities offered entrepreneurial classes. Traditionally we had to learn through mentors, readings and ultimately our mistakes. I’ve made my fair share of mistakes and I offer them to you as a lesson to consider.
1. Having poor cash management:
Too many businesses operate on a shoestring; in fact the biggest contributor to business failures is lack of capital. I understand that all start-ups operate cash-poor, but there’s a difference between being cash smart and down right stupid. Don’t let finances rule the path of your idea. Time is always on your side so be patient with progress and plan, manage and always watch your cash flow.
by Glenn Matthews on September 29, 2009
Over the years I have called, emailed, written to, confronted and probably down-right harassed more potential investors than I would like to think about.
Yes I’m an entrepreneur!
In the early days I would have a new idea every time the sun would rise and for each new idea I would need funding. However, over the years I have matured. I’ve come to realize that asking someone to invest in an idea one day only to ask them the following day to invest in a different idea doesn’t instil a lot of confidence.
