
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
PART 1
Getting Ready to Raise Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 1: Capital Formation Strategies and Trends . . . . . . . . . . . . . . 3
Understanding the Natural Tension Between Investor and
Entrepreneur • Understanding the Different Types of Investors
• Understanding the Different Sources of Capital • How
Much Money Do You Really Need? • Capital-Formation
Strategies • The Due-Diligence Process
Chapter 2: Selecting the Best Legal Structure for Growth . . . . . . . . . 25
Proprietorship • Partnership • Corporation • Limited Liability
Company • Evaluating Your Selected Legal Structure
Chapter 3: The Role Your Business Plan Plays . . . . . . . . . . . . . . . . . . 41
The Mechanics of Preparing a Business Plan • Common
Business-Planning Myths
PART 2
Early-Stage Financing
Chapter 4: Start-Up Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Financing the Business With Your Own Resources • Heaven
on Earth—Finding an Angel Investor • Other Sources of
Seed and Early-Stage Capital
Chapter 5: The Art and Science of Bootstrapping . . . . . . . . . . . . . . . 81
Ten Proven Bootstrapping Techniques and Strategies
Chapter 6: Private Placements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Federal Securities Laws Applicable to Private Placements
• State Securities Laws Applicable to Private Placements •
Preparing the Private Placement Memorandum • Subscription
Materials • Compliance Issues • Accepting Subscription
Agreements and Checks • Changing or Updating the PPM
Before Completion of the Offering • After the Closing
Chapter 7: Commercial Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
The Basics of Commercial Lending • Preparing for Debt
Financing • Understanding the Legal Documents • Periodic
Assessment of Banking Relationships
Chapter 8: Leasing, Factoring and Government Programs . . . . . . . . 131
Leasing • Factoring • SBA Programs
PART 3
Growth Financing
Chapter 9: Venture Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Primary Types of Venture Capitalists • Preparing to Meet
With Venture Capitalists • Central Components of the Venture
Capitalist’s Investment Decision • Due-Diligence Is a Two-Way
Street • Balancing Your Needs and the Venture Capitalist’s
Wants • Negotiating and Structuring the Deal
Chapter 10: Anatomy of a Venture-Capital Transaction . . . . . . . . . . 179
Understanding the Legal Documents
Chapter 11: Initial Public Offerings . . . . . . . . . . . . . . . . . . . . . . . . . 185
Advantages of Going Public • Disadvantages of Going Public
• The Hidden Legal Costs • Preparing for the Underwriter’s
Due Diligence • Selecting an Underwriter • Selecting an
Exchange • Alternatives to Using a Traditional IPO
Chapter 12: The Mechanics of an Initial Public Offering . . . . . . . . . 215
An Overview of the Registration Process • The Registration
Statement • The Road Show • The Waiting Period • Valuation
and Pricing • The Closing and Beyond
PART 4
Alternatives to Traditional Financing
Chapter 13: Franchising, Joint Ventures,
Co-Branding and Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Business Format Franchising • Joint Ventures • Co-Branding
• Licensing
Chapter 14: Mergers and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . 277
Develop an Acquisition Plan • Analyzing Target Companies
• Selecting the Target Company • Conducting Due Diligence
• Valuation, Pricing and Sources of Acquisition Financing •
Financing the Acquisition • Structuring the Deal • Preparing
the Definitive Legal Documents • Post-Closing Matters
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
Subscription Agreement • Confidential Purchaser
Questionnaire • Purchaser Representative Questionnaire •
Form D • Sample Security Agreement • Promissory Note •
State Small-Business Loan Programs • Sample Term Sheet
• Sample of Representations and Warranties • Venture
Capital-Style Series A Preferred Stock Charter Amendments
• Employment and Confidentiality Agreement • Lock-Up
and Registration Rights Agreement • Checklist for a Typical
Underwriter’s Due Diligence Request • Topics Covered in
Legal Audit Questionnaire • Confidential Questionnaire for
Directors and Officers • Data to Gather When Implementing
a Franchising Program
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421




