51–60 of 239 posts
I was part of a group which ceded managerial control of a small business (think 100-500k/year) to a minority shareholder. This person was paid a professional salary to maintain the business, while we kept majority voting rights. We still had majority ownership until he decided he didn’t give a ** about our ownership claims and openly did his own thing. The problem is, no lawyer is going to take the case because the $…
I was part of a group which ceded managerial control of a small business (think 100-500k/year) to a minority shareholder. This person was paid a professional salary to maintain the business, while we kept majority voting rights. We still had majority ownership until he decided he didn’t give a ** about our ownership claims and openly did his own thing. The problem is, no lawyer is going to take the case because the $…
Who would sell anything like that for 100 dollars in 2 transactions? If it really was worth nearly nothing I'd probably not ask my cofounder to pay me 100 bucks for it either.
Isn’t this essentially what Zuckerberg did to his cofounder? Or some variant of the same recipe…,
https://en.wikipedia.org/wiki/Eduardo_Saverin
I'd say nothing like giving up a stake for $100
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The above situation seems like swimming with goldfish. If you have less than 50% yourself, why would you bank on someone else not being able to get more than 50%?
It was misplaced trust. That's a really easy mistake to make until you've been burned by it. I'll bet that person won't make that mistake a second time. But better is to avoid swimming with the sharks at all. I have a wonderful horror story about a business deal I made where I was cheated out of about $5 mil. I didn't trust the party I was doing the deal with, so the contract negotiations took most of a year and the…
Please share.
It seems like a narcissist with a very 'dynamic' relationship with the truth chased the AI hype train and ended up with a bunch of money and attention due to a stupid VC. He pissed off the teams that invented Latent Diffusion and his partners at RunwayML in the process, and now it seems like his cofounder as well. What value is there in a company that's only famous because they spent $600k in VC money training an open source model on AWS?
1: https://www.forbes.com/sites/kenrickcai/2023/06/04/stable-di...
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People just don't know about this stuff. It was even worse decades ago when there wasn't so much startup content online.
Lawyers have always known about this kind of stuff. Blows my mind that business owners are negotiating contracts like "I know what all these words mean, why would I need a lawyer to review this?".
I was chatting with a company who sold a large minority stake in their company to a well known private equity group (think 49%) with the explicit purpose of retaining control. Soon after the transaction closed, the PE firm was able to covertly buy another 2% of voting shares from a pre-existing investor in the company, which resulted in the PE firm gaining full majority control over the company, kicked out the CEO, r…
There seem to be 2 problems here: 1. Giving another party 49% doesn't guarantee you will have retaining control. You having 51% shares does guarantee that. So, their strategy was flawed. 2. Not sure if regulations allow this, but to make it bullet proof they should have made a contract that the PR group will not go beyond 49%. Without either of the above, the company just did not do good diligence.
Can this ever work? The PR group can control the 2% without nominally owning it.