Hi There,
Could someone walk me through the mechanics of how funds typically pay for deal legal fees out of the investment amount?
Specifically, if I want to invest 100K in a startup, and the legal fees will be 5K:
* does the term sheet and equity agreement state 95K?
* does the fund pay the 5K to the lawyers directly? and transfers 95K to the company once the deal is closed?
* in the deal memo and other investment documents, is this recorded as a 100K deal or a 95K deal?
* are the deal metrics (DVPI, MOIC) calculated based on 95K or 100K?
Am closing a warehouse deal in the next few weeks so would be great to get some guidance on how others have done this in the past.
Could someone walk me through the mechanics of how funds typically pay for deal legal fees out of the investment amount?
Specifically, if I want to invest 100K in a startup, and the legal fees will be 5K:
* does the term sheet and equity agreement state 95K?
* does the fund pay the 5K to the lawyers directly? and transfers 95K to the company once the deal is closed?
* in the deal memo and other investment documents, is this recorded as a 100K deal or a 95K deal?
* are the deal metrics (DVPI, MOIC) calculated based on 95K or 100K?
Am closing a warehouse deal in the next few weeks so would be great to get some guidance on how others have done this in the past.