Venture Financing Process - Part 6. Post-Closing
The post-closing stage of the venture financing process
This article is Part 6 of 7 in Venture Financing Process. Already up-to-speed on this topic? Skip to Part 7. Timeline or check out the full New GC & In-House Counsel Resources collection.
After the closing occurs and the funds are in the bank account, the company can, for the most part, refocus on its business without the ongoing distraction of the negotiation and wrangling of different parties taking people’s time and focus. However, there are still matters to be addressed, which can cover both legal and operational matters.
Your Gunderson team will take the lead on any legally required post-closing matters, like potential securities filings or other notices that may need to be addressed. We will also be a keeper of the company’s new corporate documents that have just been executed, so while the company will certainly want to retain copies, you know that your Gunderson team will always have these available as well. To the extent your Gunderson team manages or assists you with managing your cap table, we will also make sure this is updated to take into account the new financing.
Some items, however, will need to be handled directly by the company, and it’s often best to immediately begin the process of addressing these soon after closing. These can cover:
- Financial Information Reporting
- Your documents likely gave certain investors the right to receive financial information on a specific cadence.
- Diligence Clean-Up
- If the company and investors agreed to handle any due diligence items raised after the closing.
- Post-Closing Covenants
- Your company likely agreed to certain post-closing covenants, like getting certain approvals, implementing certain policies (like D&O insurance policies) or processes, etc.
- 409A Valuations
- Usually the company will engage a “valuation firm” to conduct a new 409A valuation following the financing in order to take advantage of the IRS’s safe harbor provisions to issue stock options.
- Your Gunderson team can assist in referring you to a respected valuation firm and help provide any needed information to arrive at the best possible outcome.
While the transaction is closed, there is still work to be done and this will often fall to the internal legal and/or finance teams. Putting a plan in place to address your various post-closing requirements can be beneficial, and your Gunderson team is happy to help craft an exhaustive list of post-closing items to be addressed and help put forth a plan for addressing them.
Next section: Part 7. Timeline
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