Tech Transfer Central

Tricky Business: Drafting Anti-Dilution Clauses in University Spinout Equity Deals

Format: On-Demand Video, DVD, or PDF Transcript
Originally presented: January 28, 2015

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When it comes to drafting equity-based deals with your university start-ups, having a firm grasp on the full implications of the equity dilution scenarios is critical for both the university and the start-up founders. How you handle valuation, the type of shares issued, rights in future funding rounds, and a host of other tricky issues can work for you or against you.

Founders are also your faculty, and the wrong outcome can cause disputes with long-lasting repercussions. Then there are the investors in future rounds, who won’t like to see outrageous anti-dilution provisions or sky high valuations. And of course you must also balance the interests of the university. All of this adds up to a tough balancing act requiring expert drafting and a good deal of foresight.

Technology Transfer Tactics’ Distance Learning Division is partnering with a top IP licensing expert to help you draft agreements that walk this tightrope effectively, protect your university’s and your faculty’s interests, and prevent investor turn-offs that can doom the start-up’s long-term prospects. Please join attorney Benjamin Kern for this one-of-a-kind webinar:

Tricky Business: Drafting Anti-Dilution Clauses
in University Spinout Equity Deals

Here’s what Mr. Kern will cover in this detailed session:

Understand licensing terms that impact funding:

  • Scope of license
  • The university’s equity position
  • Exclusivity
  • Milestone payments
  • Sublicensing fees/restrictions
  • “Pay to play” provisions

Protecting the University:

  • Appropriate thresholds and formulas for change in equity percentage
  • How dilution affects valuation and pricing
  • University’s rights to further investment

Protect founders by carefully considering:

  • Funding milestones tied to valuations
  • Stock option plans and alternatives
  • Cumulative dividends

Understanding the two main formulas for approaching anti-dilution protection:

  • Full ratchet
  • Weighted average
    • Narrow-based
    • Broad-based

PLUS: Participate in the live, interactive Q&A portion of the program!

Your Expert Presenter:

Benjamin D KernBenjamin D. Kern, Partner, Winston & Strawn LLP, represents technology companies in connection with a broad spectrum of activities, from formation through capital transactions, intellectual property matters, personnel matters, commercial and strategic relationships, and exit.  His practice has spanned industries including wireless; alternative energy; technology services; enterprise and stand-alone software; social networks, applications and gaming; cloud-based transactions, software as a service (SaaS); for-profit and nonprofit higher education; as well as device and component design, manufacturing, resale and OEM transactions. Mr. Kern also represents organizations in connection with their technology commercialization, procurement, licensing, services, joint venture and outsourcing transactions, as well as representing professional investors in connection with the structure, negotiation, and documentation of investment transactions, and the management of investments from initiation to disposition.

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CLP Credits are also available.

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