For nearly 200 years after its inception in 1792, the New York Stock Exchange (“NYSE”) faced insignificant competition as the premier stock exchange within the United States.  Then, alongside the technological surge of the late 20th Century, came an innovative alternative to the NYSE: the NASDAQ Stock Market (“NASDAQ”).  Boasting itself as the world’s first electronic stock market, NASDAQ quickly gained popularity and market share in America’s financial sector by offering modernized processes for stock trading.  Today, the NYSE and NASDAQ are positioned as the world’s two largest, most influential, and widely recognizable stock exchanges.  And a new exchange in Texas is “bullish” on becoming the third.Continue Reading New Stock Exchange Set to Launch in Texas

When acquiring or selling a company, many nuances exist in various stages of the process, some of which are not readily apparent on their face. One of those nuances is the interplay between accounts receivable and working capital.

Often, in an acquisition, a portion of the purchase price will essentially remain in the target company’s bank account as “working capital.” Working capital is the amount of cash required for a company to operate over a set period of time. The amount of working capital typically will not be a set number, rather, there will be a working capital target on which to base the purchase price on, and the final working capital will be delivered at closing, or determined post-closing.Continue Reading Working Capital and Accounts Receivable

Emerging growth companies commonly search for an influx of cash through funding provided by investors. Venture capital firms, angel investor groups, and high net-worth individuals (collectively, “Investors”) are common sources tapped for obtaining that much-needed cash. In these scenarios, the Investors provide cash to the corporation in exchange for shares of the corporation’s preferred stock. Each time a corporation offers its stock for cash, a new series of preferred stock is created. The name of the financing round generally corresponds to the name of the series stock. Typically, the initial rounds of financing are known as a “Series Seed” or “Series A” round, followed by a “Series B,” then “Series C,” and so on and so forth as further funding is taken in over the years. When going through these financing rounds, whether the very first Series Seed round to the last financing round before an exit, the same agreements are entered into and amended to memorialize the rights, privileges, and preferences of the various series of preferred stock offered.Continue Reading Venture Capital Financing: An Overview of Financing Documents

The first thing many founders/entrepreneurs think of when starting a new business is, “I need an LLC.” The establishment of a Limited Liability Company (LLC) in Texas can be a strategic maneuver for entrepreneurs and businesses aiming to leverage the benefits of limited liability and operational adaptability. In fact, a quick Google search will direct you to a myriad of websites offering step-by-step instructions, as well as online service companies offering to help you start an LLC for free.

However, at a time when personal privacy is cherished more than ever, privacy is a crucial consideration when starting a business entity. While establishing a business requires some public disclosure, several strategies can be used to preserve privacy and maintain anonymity.Continue Reading Texas LLC Formation: 4 Privacy Considerations for Entrepreneurs

From early-stage startups to seasoned enterprises, businesses eventually form at least one legal entity to carry out their operations. Down the road, as opportunities arise for a business to expand, acquire others, merge, or otherwise liquidate their holdings, they often find themselves forming multiple legal entities as part of a larger corporate structure. However, regardless of whether a business is forming its first—or its four-hundredth—entity, all businesses should treat entity formation as a process that begins well before the filing of formation documents and which almost always includes drafting a set of governing documents. When businesses approach their initial governing documents with a strategic intention—as opposed to adopting boilerplate or form governing documents—they may reap certain advantages, including potentially bypassing the need for future legal expenses.Continue Reading Entity Formation as a Process: The Strategic Importance of Carefully Drafting Limited Liability Company Agreements Before Forming an Entity