Module 5 · Chapter 15

The Exchange, the Reorganisation and the Handover

Before a venture-backed company is sold, its crowded register must become one clean line. One deed does that in a fixed order of steps, and the sale agreement relies on every one of them.

≈ 15 min read 8-question test

In this chapter

  • How one deed turns a crowded register into one owner and one class
  • What happens to options, preference shares and minority holders at an exit
  • How the Uplift works, and why the buyer's papers never mention it

15.1The clean-up deed in one paragraph

Before Meridian sold Solaris, it wanted to own every share, in one class, with nothing that could turn into a share. A buyer will not negotiate with nine shareholders, read three classes of preference share or take on an option plan. So one deed cleared all of it on a single day. Meridian went from 55% of the register to 100%, and nine months later it agreed to sell the whole company.

Key point

A buyer pays most for a company it can take in one line. That means one owner, one class of share, and nobody with a right to a new share. Every step of the deed serves that line.

Also in this chapter

  1. One deed, one transaction
  2. The order in which the steps take effect
  3. Why every preference class converted
  4. Options at an exit: the sweep
  5. Paper or cash: the two elections
  6. The Uplift: more money if Meridian sells high
  7. Why the Uplift is not Leakage
  8. Three resolutions of the only shareholder
  9. Ending the old agreements, and the one that survives
  10. One line in the sale agreement
  11. Two loose ends the deed did not reach
  12. Your job

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