Home Law Key Factors To Consider When Negotiating With A Private Equity Lawyer

Key Factors To Consider When Negotiating With A Private Equity Lawyer

by Saint Kian

When negotiating with a private equity lawyer there are a few factors to keep in mind. These include exclusivity, anti-dilution protection clauses, covenants, and keeping up to date with the market and industry trends.


If you’re negotiating with private equity lawyers, you might wonder if a period of exclusivity is a good idea. In fact, it’s a common request from potential buyers, but there’s no need to rush in.

An exclusivity agreement is a formal agreement to give one party exclusive rights to the company. It may last for a few weeks or a few months.

The goal of an exclusivity agreement is to lock in the best deal. This can be done by offering a premium on the company’s current trading price or by cutting the costs of operating the business.

Ideally, the exclusivity period should be based on the company’s needs. A period of 60-90 days is not too long, but it can be shortened if there’s a compelling reason to do so.

Exclusivity is a common feature in a VC deal. A buyer who’s serious about investing in a company wants to be the first in line. As a result, they’ll often demand a formal period of exclusivity.

Anti-dilution protection clauses

Anti-dilution protection is a form of security grant that is used to protect the equity investment of a company’s founders and other preferred stockholders. It may be granted in a variety of ways, such as a stock option, a convertible security or a dilution proof.

In the venture capital world, anti-dilution protection is common. When a startup receives venture capital funding, the investors hope that the later rounds will increase the value of the company. Dilution is the effect of new shares being issued to existing shareholders. These new shares decrease the value of the investor’s ownership in the company.

A common misconception is that a company must issue additional preferred stock to provide anti-dilution protection. However, this is not necessarily the case. Rather, the company needs to increase the number of common shares that are convertible into preferred stock.

Another type of anti-dilution provision is the weighted average. This calculation alters the conversion rate of the preferred shares according to the total amount of capital that the company was able to raise, as well as the number of outstanding shares.


A covenant is a legally binding agreement between two parties. In negotiating a deal with a private equity lawyer, it’s important to know what covenants exist, what they are for, and how they can be used to your advantage.

One of the most common types of covenants is debt. It imposes a financial obligation on the issuer to repay a loan from a lender. The debt is typically in the form of bonds, mortgages, and loans.

Another type of covenant is called a restriction. It’s designed to prevent an issuer from engaging in transactions with affiliates that are unfair. An example of this is a merger restriction.

Negative covenants, on the other hand, put restrictions on actions or investments that would negatively affect a company’s credit standing. They are often tied to specific numerical metrics, such as the maximum debt-to-asset ratio.

Covenants can also restrict the use of real estate. Depending on the type of property, this might mean that a landowner can’t sell his or her property, rent it out, or lease it.

Keep up-to-date with the market and industry trends

When you’re negotiating with a private equity lawyer, you need to keep up-to-date on the current trends in the industry and market. There are many ways to do this. For example, the Venture Capital Association offers example equity documents and legislation that you can reference. If you follow private equity firms on social media, you can also stay up-to-date on current developments in the industry.

You can also stay informed by reading publications such as the FT. This is a good source of news about companies and sectors, and is a great way to find out about the most recent legal changes.

Related Articles