Myth: The Cap Table is too Small for a Professional Shareholder Rep
Speaker 1 (00:02):
So one thing to consider when hiring a shareholder rep is how many shareholders you have. There's some people that say, well, I don't have a lot of shareholders, so I don't need a shareholder rep in my experience, it's actually irrelevant.
Speaker 1 (00:16):
It's not the shareholders who are driving you nuts. It's the buyer and how they're going to act that's going to bring the issues that you need to hire a rep. Besides, if you have only a few shareholders, then your share of the escrow, or earn-outs greater, it's not diluted between hundreds and hundreds of shareholders. So I would actually argue that it's either irrelevant or it's even more important to you to hire the best people you can, even if there were only two shareholders, it actually didn't change my job. I still had this buyer that was better equipped, better capitalized, more money, more firepower with these issues. What was interesting is when I was just one of two shareholders, you realize, oh my gosh, my portion of this escrow or my portion of this earn-out is much larger than if there'd been 10,000. In fact, sometimes when there were 10,000 shareholders and I was the rep, I cared a little less because whatever the outcome diluted me very little. So when you actually have a smaller set of shareholders, sometimes that's when it's most important to hire a shareholder rep. My name's Jason Mendelson, and I am a former lawyer, software engineer, multi-company starter, venture capitalist, and I've been involved in mergers and acquisitions for the last 22 years of my life.