Creating a better environment for business counseling and transactional practices.

Credit Facilities for Emerging Companies – What to Look for at the Term Sheet Stage

Many emerging companies turn to venture debt facilities to meet at least some of their financing needs. Venture debt facilities are typically provided to emerging companies that are likely to require further equity investments from their venture capital backers. Most of these facilities include a loan (term loan and/or a revolver, typically asset-based) and a warrant.

The demand for venture credit expanded greatly during the Great Recession, and shows no sign of easing. A majority of venture-backed companies now enter into a venture debt facility during their life cycles. Many enter into two or more venture credit facilities. As venture capitalists continue to be selective (either by choice or due to scarcity of funds) in their additional capital deployments, and as credit remains cheap relative to historical norms, demand from emerging companies for debt is likely to stay strong.

Latham & Watkins attorneys Evan Smith, Haim Zaltzman and Jim Morrone have co-authored an alert entitled “After the Fiscal Cliff: Credit Facilities for Emerging Companies – What to Look for at the Term Sheet Stage.” The alert highlights some of the key terms that Latham often sees in loan agreements for emerging companies and the related warrants.  Emerging companies often fail to address these terms at the term sheet stage; yet these terms are commonly reflected in the final documentation. This alert will be of interest to those representing emerging companies, the venture capital and private equity firms that invest in emerging and growth companies, and the banks and lenders active in the emerging growth field.

To view full article, please click here

Business Transactions Committees

  • Business Transactions Public Policy Committee
    This is a joint committee between the Business Transactions and Financial Services Sections. The BBA is very active on the legislative front. Often times, business attorneys are asked to lend their expertise.
  • Business Transactions Public Service Committee
    This is a joint committee of the Business Transactions and Financial Services Section. This committee helps with the Business Law Pro Bono Project which is run by Lawyers Clearinghouse. This committee also works to find new transactional pro bono opportunities for business attorneys.
  • Commercial and Consumer Finance Committee
    This committee focuses on commercial and consumer lending.

    Contact Information

    Christopher Somma

    Goodwin Procter LLP

    (617) 570-3948

    Robert Cooper

    OneUnited Bank

    (617) 457-4400

  • Communications Committee
    This is a joint committee between the Business Transactions and Financial Services Sections. This committee publishes information relevant to the business bar. If you are interested in an editorial position or writing an article, please contact the Co-Chairs.

    Contact Information

    Scott P. Macbeth

    EMC Corporation

    (508) 249-1492

  • Corporate Counsel Committee
    This committee focuses on programs and activities of interest to in-house counsel.

    Contact Information

    Elizabeth Black

    The TJX Companies Inc.

    (508) 390-1000

    Jill A DiGiovanni

  • Corporate Law Committee
    This committee focuses on the development of laws and policies affecting corporations — both profit and nonprofit — and business trusts.

    Contact Information

    Jonathan Draluck

    Gesmer Updegrove LLP

    (617) 350-6800

  • Energy and Telecommunications Law Committee
    This committee addresses regulatory and related issues affecting the natural gas, electric and telecommunications industries in Massachusetts — on the federal level and in other jurisdictions. Members typically practice before the Massachusetts Department of Public Utilities, Massachusetts Department of Telecommunications and Cable, Massachusetts Department of Environmental Protection, Federal Energy Regulatory Commission, Federal Communications Commission, and state and federal courts.

    Contact Information

    Jamie M. Tosches

    Office of the Massachusetts Attorney General

    (617) 727-2200

    James M. Avery

    Brown Rudnick LLP

  • Mergers and Acquisitions Committee
    This committee addresses issues unique to business combination transactions, including mergers, share exchanges, tender offers and asset purchases. Lawyers representing buyers, sellers and advisers in planning, negotiating and executing international and domestic public and private transactions are involved.

    Contact Information

    Michael A. Conza

    Bingham McCutchen LLP

    (617) 248-7000

    Marc D. Mantell

    Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

    (617) 348-3058

  • Securities Law Committee
    This committee provides members with opportunities to learn about and discuss issues in securities law, such as compliance and regulatory issues.

    Contact Information

    Elizabeth W. Fraser

    Greenberg Traurig, LLP

    (617) 310-6237

    Benjamin Michael Hron

    McCarter & English, LLP

    (617) 449-6584

  • Steering Committee
    The leadership committee of the Section organizes programs and discusses policy. To inquire about opportunities, please contact the Section Co-Chairs.
  • Venture Capital & Emerging Companies Committee