Capitalization, Investment & Ownership Interests

What is Business Capitalization & Investment?

Businesses of all sizes often need capital to operate, scale up or invest in new processes or technology.  Capital can come in the form of equity, selling shares in the business, or debt, short or long term financing. 

Most of these businesses’ investment offerings are except from the Securities and Exchange Commission.  However, to be exempt and maintain compliance, the business will need to make certain filings and disclosures at the State and Federal level. A business lawyer can help in preparing these types of documents to ensure full compliance. 

Managing a business interest is essential to operating a successful business.  This interest is the central concern of every buy and sell transaction.  Potential investors will seek to have a majority ownership in the managing interest of a business since they are taking a risk by investing resources such as capital into the business.  The parties to a transaction must value the business, identify restriction on the transfer of stock and comply with contracts such as shareholder agreements, operating agreements and LLC membership ownership agreement. 

Whether a startup or an operating entity, every business will encounter a need for capitalization and many forms of contract negotiations which may include: purchase and sale agreements, sale or investment in a business, shareholder agreements, operating and partnership agreements, memoranda of understanding, joint venture agreements, confidentiality and non-disclosure agreements, contracts with vendors and employees.