Private Equity and Venture Capital

Cornerstone Research consults on matters involving business valuation for public and privately held companies. We have worked on a variety of transactions, including mergers and acquisitions, initial public offerings, private placements, spin-offs, hostile takeovers, financings, and going-private transactions. In these contexts, we have assessed the adequacy of consideration or reasonably equivalent value, including direct and indirect benefits exchanged in corporate transactions. In addition, we have evaluated fairness opinions and valuations, compared alternative bids, analyzed hedging by various counterparties, and calculated damages arising from corporate transaction litigation. We have also analyzed the impact of capital structure on firm value.

We also have experience with valuation issues in the context of entire fairness disputes and appraisal matters in the Delaware Court of Chancery and other venues.

Cornerstone Research has expertise in the valuation of securities typically involved in financing start-ups or other companies backed by venture capital and private equity firms. These include warrants, options, debt instruments, credit derivatives, and convertible and preferred securities. We have also evaluated specific interests, such as minority shareholder stakes, in both public and private firms.

Corporate governance allegations are common in corporate transactions, including alleged failure by a target company’s board to organize a competitive sales process and set up necessary committees; insufficient disclosures or misrepresentations in merger filings; and conflicts of interest related to executive noncompete agreements, change-of-control pay, and retention by the acquirer.

At Cornerstone Research, we have extensive experience addressing these types of allegations, particularly in private equity and venture capital transactions. We have analyzed governance standards and industry practices for the sale process, proxy disclosures, merger terms, and executive pay. We have also examined the customs and practices of due diligence in acquisitions, private equity, venture capital, and other transactions. Our staff and experts are highly skilled in analyzing these complex issues and providing valuable insights to counsel representing clients in these areas.

At Cornerstone Research, we specialize in valuing intellectual property and contracts, particularly in the context of private equity and venture capital transactions. Our team has expertise in securities and has evaluated a range of agreements, including noncompete, technology development, joint venture, and supply and purchase agreements. In addition, we provide practical approaches to valuing specific assets, including patents, trade secrets, and subsidiaries, and are a valuable resource for counsel representing clients in these transactions.

Cornerstone Research has analyzed private equity and venture capital fund inflows and outflows and the relationship between those flows and fund or company performance. In this context, we have also examined performance incentives for managers and pricing structures for investors.

Cornerstone Research has experience in disputes involving an acquirer’s decision to abandon a proposed acquisition. In these cases, an acquirer may cite, for example, a material adverse change, reliance on misleading information, or other misrepresentations.

We have also addressed post-closing disputes, such as an acquirer alleging that the former target’s management and directors misrepresented information about the target or a former target’s shareholders alleging that the value of their consideration was adversely affected by misinformation or breach.

Cornerstone Research has worked on several disputes over a target company’s resistance to an acquisition proposal. We have worked with experts to prepare opinions on the rationale for and economic effects of target and acquirer strategies in a takeover. We have addressed valuation and other issues arising in this context.