Like it? PLEASE +1 it! Thanks! Evan Signature
Evan Carmichael Top Header about About

The Joy of Registration Rights

Guest post by: Brad Feld
Become an Author

As Jason and I close out our Letter of Intent series, we thought we’d cover one last item that has screwed many a seller – the case where a public company acquires a private company for unregistered stock. Some buyers will try to ignore this – a good seller should work hard up front to get agreement on what type of stock and what kind of registration rights they will be receiving. Expectation setting is key in this situation.

One thing to consider here is the non-binding nature of a "promise" to register shares. The buyer will argue that they can’t guarantee to register the shares because they don’t control the SEC. The past history of the buyer with the SEC is crucial, including knowing the current status of SEC filings, any outstanding registration statements, and any promises that the buyer has made to shareholders of other companies it has acquired.

We’ve had several unfortunate situations where we’ve been "promised" a quick registration from a buyer, only to have them drag their feet on the filing after the deal, or get the filing hung up in the SEC. In today’s SOX environment, we’ve been amazed by the poor behavior of several of the big four accounting firms who "don’t have time" to work on merger accounting questioned by the SEC, especially in situations where the accounting firm is not going to be the merged company’s auditor going forward. Be very careful here as stock isn’t tradeable until it’s registered and the 12 month automatic waiting period for unregistered stock to become registered (in the absence of a registration statement filed with the SEC) can be a long time (and a lot of volatility) to have to wait for.

While I much prefer sex (as in “The Joy of …”), sometimes I have to settle for registration rights. With this post, Jason and I end our Letter of Intent series. We hope you’ve enjoyed it – feel free to comment and email me additional questions to address.

Read this article on Brad's blog.

Related Articles

  Hut 8, Hut 9, Hut 15!
  What's the Point of Getting a Federal Trademark?
  What Is Common-Law?
  ® vs. ™
  Company Incorporation in Hong Kong and China
  Company Registration in Hong Kong
  Trademark Registration India
  Company Incorporation in Asia
  Protecting Your Business Name
  BVI Company Incorporation
  Hong Kong Company Incorporation/Registration
  Offshore Bank Account in Hong Kong
  Franchise Registration States
  Best Name For Your Business
  Company Incorporation in HK and China
  How to Deal With New Car Registration
  Five Tips for Making it Easy to Register for Your Webinars
  What's in a Name?
  Do Your Due Diligence

Home > Entrepreneur-Advice > Brad Feld > The Joy of Registration Rights >

Free PDF Download
Deep Breath
By Brad Feld

About the Author: Brad Feld

RSS for Brad's articles - Visit Brad's website
Brad Feld is currently a Managing Director at Mobius Venture Capital and has been with the firm since 1996. Prior to Mobius, Brad founded Feld Technologies, which was sold to AmeriData Technologies in 1993, where he became Chief Technology Officer. Brad currently serves on the boards of a number of private companies, including Atreus, Comergent, ePartners, FeedBurner, Gold Systems, Judy's Book, Klocwork, NewsGator, Quova, Rally Software, and StillSecure. In addition, he is on the board of The National Center for Women & Information Technology, The Community Foundation Serving Boulder County, and The Colorado Conservation Trust. Brad has previously been a member of the board of directors of the Young Entrepreneurs Organization and founded the Boston and Colorado chapters. He holds Bachelor of Science and Master of Science degrees in Management Science from the Massachusetts Institute of Technology.
Click here to visit Brad's website.
Dashed Line

Feld Thoughts
More from Brad Feld
Pitch More Faster Read Versus Listen
Its Better to Fail Quickly
Business Plan Charter
Managing Emotions Under Pressure
Would You Want It If It Were Free

Related Forum Posts

Review Napoleon Hill Online Webinar Review Napoleon Hill Online Webinar
Re: how do I get started with Wordpress blog? Re: how do I get started with Wordpress blog?

Share this article. Fund someone's dream.

Share this post and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
Share for a Cause

By: Evan Carmichael

Like this page? PLEASE +1 it! Evan Signature


Subscriber Counter
  Supporters: Thank you Sharon Galor of Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs! 
Connect with Evan google plus facebook Twitter YouTube Contact