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Pandemic-Related Deal Litigation Highlights Buyer Leverage in Transactions Requiring Debt Financing

Cooley M&A

Since that post, the Delaware Chancery Court has had the opportunity to consider some preliminary issues relating to certain of those jeopardized transactions involving private equity-backed buyers.

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What is Compulsory Convertible Debentures?

RNC

When raising funds, the primary question is whether to opt for equity or debt financing. Equity financing risks diluting ownership stakes in the company, while debt financing entails hefty interest rates. What is Compulsory Convertible Debentures? How do CCDs Work?

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What are Debt Warrants and How Do They Work for Startups?

Lighter Capital

Ready to arm yourself with knowledge that will help you make the best financing decisions to keep growing a healthy business? What is a debt warrant? A debt warrant is an agreement in which a lender has a right to buy equity in the future at a price established when the warrant was issued or in the next round.

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Have Your Cake, and Closing Too: Invoking Prevention Doctrine, Delaware Chancery Court Grants Seller’s Request for Specific Performance in COVID-Related M&A Dispute

Cooley M&A

In reaching this order, the court applied the prevention doctrine, finding that the unavailability of buyer’s debt financing did not permit buyer to circumvent its obligation to close because buyer materially contributed to the debt financing being unavailable.

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SAFE Caps and Discounts: Setting the right terms for your round

Equidam

There are two main categories of convertible instrument: Convertible Notes, a form of debt with interest payments until the point of conversion, and SAFEs which are quite literally simple agreements for future equity. A valuation cap is a ceiling on the price at which the investment will convert to equity. What is a cap?

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The Twitter Buyout: Is Elon Musk a Madman or a Genius?

Brian DeChesare

Worst Case Outcome: Elon loses ~90%+ of his invested equity and gets a very negative IRR. The 10-K and loan/financing document are the most important parts because you need the company’s annual statements to build a model, and you need the debt tranches, interest rates, etc., Total wipeout. to build in the LBO functionality.

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Sidley Discusses Chancery Opinion Highlighting Importance of Clear Integration and Non-Reliance Provisions in M&A Agreements

Reynolds Holding

Castle Creek”), the buyer, and Paragon Biosciences, LLC (“Paragon”), the buyer’s private equity sponsor. In fact, one such Castle Creek debt financing document, a February 2020 loan agreement, did not permit Castle Creek to redeem its equity securities. to Castle Creek for cash and Castle Creek preferred stock.