Frequently Asked Questions
What is M&A or mergers and acquisitions?
M&A refers to the merger of two or more companies, creating a larger third company. It is the combination of two or more entities, where, in some cases, at least one of the companies is absorbed and ceases to exist, integrating into the whole. On the other hand, acquisitions involve one company taking control of another by purchasing its assets or shares. In these cases, the companies retain their legal profiles. Before any M&A process, it is essential for all stakeholders to fully understand the existing risks and opportunities, which can only be achieved through a rigorous due diligence plan.
What is a lawyer specialized in startups?
A lawyer specialized in startups understands not only the applicable laws but also the specificities of the business, such as agile decision-making, seeking funding through investment rounds, and the need to protect the business model from competition. A startup lawyer accompanies and advises entrepreneurs at all stages of the business process, providing support in legalizing applications and platforms.
What is a shareholders’ agreement?
A shareholders’ agreement is a contract that establishes the internal rules and operational dynamics among the shareholders of a startup or another company. These agreements usually include clauses such as tag and drag along, good and bad leaver, pre-emptive rights, incentives for work, non-compete clauses, and share revaluation clauses.
What is a Non-Disclosure Agreement (NDA)?
A Non-Disclosure Agreement (NDA) is a contract in which parties agree not to disclose confidential information obtained through defined channels specified in the agreement. NDAs can be signed among partners, investors, employees, and even suppliers. These confidentiality agreements are particularly relevant at the beginning of a startup, as protecting confidential information, such as specific technological developments, client portfolios, or market studies, is essential for the viability of the business.
What is an Investment Round?
An Investment Round is the most common form of financing for startups, especially in their early stages. It is a process through which a startup seeks investments from individuals (Business Angels) and other investing companies (Venture Capital). Investors acquire a portion of the company’s capital and become new partners of the startup. It is important for the startup to approach the investment round with a well-defined strategy and structure by its founding partners, as investment rounds and the addition of new partners will shape the company’s future.
What are convertible notes or loans?
Convertible notes or loans are common agreements in startup investment rounds and represent a financing instrument. These agreements establish that, along with other interest clauses, the investor has the option to convert the contributed capital into shares of the company.
What are Phantom Shares?
Phantom Shares, or phantom participations, are mechanisms used to attract, link, and retain human talent within a company. Phantom Shares grant employees “imaginary” participation rights in exchange for meeting certain objectives, such as staying with the company for several years. These phantom participations can convert into actual company shares upon maturity, as a way to compensate the effort and commitment of the worker in the company’s early years.