The Episode in 60 Seconds
Just like your apartment, your company needs some basic housekeeping in order to avoid descending into chaos.
- It’s not advisable to negotiate your term sheet without a lawyer if you don’t have previous experience. Although they aren’t legally binding they set a strong precedent which is hard to negotiate your way out of.
- By the same token, don’t use the template of your investor.
- Be sure you understand the liquidation preferences you agree to
- If fundraising has to be fast and determining a price is difficult, consider a convertible loan
- Watch out for IP (intellectual property) rights, notice period and non-compete clause (limit 3 years)
- For employee incentivisation, you can decide between
- Share plan: more tax friendly for your employees, usually higher administrative burden for the company
- Phantom stocks: easier to administer but taxed as income
Exits usually take the form of either an M&A (Merger and Acquisition) or an IPO (Initial Public Offering)
- M&As come in 2 forms:
- Asset deal: meaning you sell all the companies assets, including employees to a new owner
- Share deal (more common): the acquiring party buys a majority of the shares and therefore takes control of the company.
- IPOs are still rare in Switzerland, mostly because they involve large costs (several $ millions) for preparing the so called “prospectus”, the document based on which the shares are offered on the stock exchange.