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Dilution › Shareholders

Pillsbury - Propel

Understanding Dilution: What Every Founder Should Know Before Raising Capital

Pillsbury - Propel on

For startup founders, few concepts are as important—or as commonly misunderstood—as dilution. It often first arises during a financing round, when investors receive equity (i.e., shares) in exchange for capital. Dilution is...more

Fenwick & West LLP

What Founders Actually Own at IPO (And Why It Matters Now More Than Ever)

Fenwick & West LLP on

Founders often dream about the IPO moment—the bell-ringing, the headlines, the validation. But what’s often overlooked is what ownership actually looks like by the time you get there....more

Proskauer - Regulatory & Compliance

SEC Adopts New SPAC Rules

Proskauer - Regulatory & Compliance on

On January 24, 2024, the SEC adopted new rules that apply to SPAC transactions and the adopted rules largely track the agency’s proposals with some notable exceptions. The new rules will become effective 125 days after...more

Barnea Jaffa Lande & Co.

Intricacies of SAFEs (Simple Agreement for Future Equity)

Barnea Jaffa Lande & Co. on

A SAFE is designed to be short and straightforward. In essence, the investor provides cash now against a promise to receive shares in the future. The challenges of negotiating full transaction documents, including agreement...more

Sheppard Mullin Richter & Hampton LLP

Delaware Supreme Court Holds that Equity Dilution and Expropriation Claims May Only Be Brought Derivatively, Overruling Prior...

Sheppard Mullin Richter & Hampton LLP on

In Brookfield Asset Mgmt. v. Rosson, No. 406, 2020, 2021 Del. LEXIS 291 (Del. Sept. 20, 2021), the Delaware Supreme Court held that claims for wrongful equity dilution may be pursued only derivatively on behalf of the...more

Skadden, Arps, Slate, Meagher & Flom LLP

Valuation Challenges for Fintechs Highlight Legal Considerations in ‘Down Rounds’

Skadden, Arps, Slate, Meagher & Flom LLP on

In recent years, fintech has been an attractive sector for growth capital, as evidenced by robust investment and M&A valuations in the sector. While interest remained high in 2019, deal volumes began to level off early in the...more

Sheppard Mullin Richter & Hampton LLP

Delaware Supreme Court Confirms that Dilution Claims Typically Are Derivative and Are Extinguished After a Merger

Sheppard Mullin Richter & Hampton LLP on

Stockholder claims alleging wrongful dilution are typically considered to be derivative in nature. Several decisions out of Delaware, however, have created exceptions to this general rule allowing stockholders to sue...more

Morris James LLP

Court Of Chancery Explains When A Dilution Claim Is Direct

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It is often said that when a majority stockholder issues more stock to himself at an unfair price that is a direct claim and not derivative. But as this decision points out, that is a little too simplistic....more

Morris James LLP

Chancery Enjoins Board in Potential Stockholder Dilution Scheme

Morris James LLP on

Directors and officers of struggling corporations seeking capital or startups willing to trade equity for cash should read the Delaware Court of Chancery's recent transcript ruling in Elite Horse Investments Ltd. v. T3...more

King & Spalding

Delaware Court Opens the Door to Private Dilution Claims Against Venture Capital Firms

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The Delaware Court of Chancery’s recent opinion in Carsanaro v. Bloodhound Technologies is a wake-up call to venture capital firms. In a nearly 40 page opinion, Vice Chancellor Laster held that VCs are not necessarily immune...more

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