jalonso510

I don't think it's as nefarious as that. What people are calling the "public" position here is the value of preferred stock sold in a financing, and the "internal" valuation is the value of common stock. They're different things - the preferred stock has downside protection and other special rights that make it more valuable than the common stock so it should have a different price. These internal valuation reports pretty explicitly calculate the value of the common stock as a discount applied to the preferred stock price, due to the rights and liquidation preferrence and the fact that the common is not freely tradable.

A new Lands or Lore.

Or, a remake of Tie Fighter.

The classified board structure is available for you to read about in their public filings and the Twitter investor relations site. It's not fanciful or nonsense - it's a commonly used takeover defense that Twitter put into effect several years ago. I don't know why Twitter's board accepted the deal, I'm just talking about the defenses in place and how they all worked. Apologies if that offended you somehow.

The shareholder's control over Twitter is not as direct as you are suggesting. Even if 100% of shareholders were supportive of Elon's deal, they could not immediately force the board to accept the offer. If the board refused to approve the deal, the shareholders' mechanism of control would be to elect new directors. But the company's bylaws do not allow for that to be done immediately. They would have to vote at the next annual meeting. And I believe Twitter has the protection of a staggered board of directors, meaning that only a portion of the board is up for election in any year. The end result is that it would take several years for the shareholders to elect a new board in place to then vote in favor of the sale.

This is not correct. The board negotiated a deal with Elon after putting the poison pill into effect. If Elon had made a deal directly with the stockholders, that would have triggered the poison pill. He surely spoke with and lobbied the stockholders for support, but the deal he agreed to was approved by the board.

seems like the springing requirement to negotiate a paid license after $1m in revenue is just destined to be forgotten. it will come up two rounds later in diligence and be a minor pain to deal with. I'd probably avoid using something licensed under this just to avoid the headache later. or would prefer to pay for a commercial license upfront even.

I think the article is overstating the scope of the coalition a bit. If I understand correctly, it's talking about the format and transportability of the cap table, but not doing anything to change how broadly a company will choose to make the cap table available. So not really transparent, but more importantly avoiding vendor lock-in.

Small point only the lawyers will care about - they say they are using Goodwin form documents instead of Orrick form documents. Will make it much nicer to work with companies incorporated on Stack than the others.

The Privacy Shield framework that was just declared invalid by the EU included a requirement that US companies make themselves available for arbitration of disputes brought by EU data subjects. GDPR by itself doesn't include that concept. But if GDPR is going to be enforceable, the negotiation around a successor to Privacy Shield should probably include it.

When term sheets say they are non-binding, they will usually say "except the sections about confidentiality and exclusivity". So those will be the only parts that actually are enforceable promises.

But the exclusivity period is typically 30-45 days. There would have needed to be some particular reason for six months, given how far off-market it is.

Term sheets do away for the need to speculate about whether there is a binding obligation or not - they always explicitly say that they are not binding, and then both parties sign and agree to that.

Industry standards are though that once the term sheet is signed, the deal is 99% sure to happen, unless there are serious problems discovered in due diligence.

Even in deals where there is a breakup fee, it's not a part of the LOI. It would be negotiated as a part of the Merger Agreement or Asset Purchase Agreement, to cover what happens if the deal signs, but then one party breaks off before moving to closing. The LOI is always non-binding so there's no firm commitment to do the deal at that phase and no penalty for breaking up.

No dispute from me that you can save a little bit on taxes by forming a California corporation if you're in California. Specifically the ~$400 of Delaware franchise taxes. But my point is that any company doing typical startup activities will spend more than $400 extra the first time they interact with their lawyer, an investor's lawyer or the state of California.

For example - this week I'm helping someone with a simple filing in California, and the processing time is 10-12 days, unless we pay California an extra $350 expedite fee, whereas Delaware will turn the same filing around in 2-3 days with no expedite fee.

Or, for another one - in California you can't submit an electronically signed document for a filing, so you and your lawyer get to spend the extra billable time dealing with scanning PDFs instead of DocuSign.

And you get to deal with the lottery of attorney reviewers who will sometimes reject Articles of Incorporation over things that have been OK in every other document you've ever filed.

And this is all separate from the fact that the lawyers on both sides of your transaction are secretly scratching their heads while they dust off their copy of the California Corporations Code and billing your for the time they spend figuring out what's different from Delaware.

It's just not worth it for the $400.

For a traditional startup, that will (i) raise money from investors or (ii) give equity to employees, you should just be a Delaware c-corporation. Those are streamlined, known, and easy processes with a Delaware corporation. Every lawyer in this space has forms for that and can read those documents with a baseline of familiarity. If you try to innovate here and set up a startup as an LLC or a California corporation, you are complicating every corporate transaction you'll do and adding cost to every interaction with your lawyer and the counterparty's lawyer. And you will prohibit investment from certain VCs who aren't able to invest in pass-thru entities because some of their LPs manage retirement money and are subject to ERISA.

There are other businesses where an LLC makes sense, including possibly for a bootstrapped startup that will have one stockholder for its whole existence. But that's not my area.

Not even going to include a disclaimer about this not being legal advice, because I am a lawyer and this is good advice :)