seizeandbe

Carpe Diem

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Startup your life. Filling the gap between being a student and becoming an entrepreneur.

I was invited to give a cycle of conferences at ITESM in Pachuca and got the chance to share Dunno with several hundred people.

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Humans beings suffer because they attach themselves to form.

Today at our Zen ceremony we shared thoughts about a specific paragraph in Dogen’s Genjokoan:

"Firewood becomes ash, and it does not become firewood again. Yet, do not suppose that the ash is future and the firewood past. You should understand that firewood abides in the phenomenal expression of firewood, which fully includes past and future and is independent of past and future. Ash abides in the phenomenal expression of ash, which fully includes future and past. Just as firewood does not become firewood again after it is ash, you do not return to birth after death."

Mike, a friend of mine, posed the question: “So in order to avoid attachment one must not care?”. As soon as he finished asking, the discussion started revolving around the topic of attachment but somehow I thought the answer was more profound so I waited until everyone was done and then added: 

Things are, grass is grass, clouds are clouds, firewood is firewood and ash is ash. Everything is and part of being includes our transformation potential. Firewood wasn’t a tree, it’s firewood with a past and future but that future is aligned to the potential of transformation of firewood. In other words; it’s not about not caring in order to prevent attachment, it is about accepting that everything in the universe can be transformed and as long as we know that the object, entity or person will eventually evolve, we can then care as much as we want to because we embrace their future transformation. Human beings suffer because they attach themselves to form, they care only about the stage of evolution in which something is. Let me give you an example: When a couple breaks up, one or both of the people involved might begin to suffer because they miss the relationship as it was, this is the form. If the same couple had known from the beginning that the relationship they started had the potential of someday becoming a friendship and they embraced that transformation then the outcome is completely different. Because they accept the fact that they could become only friends at any given time they are able care about their relationship as a couple and nurture it without creating attachment.

At the end of the ceremony Mike approached me and thanked me. I was eager to elaborate about my thoughts on transformation potential, but I decided to leave that for another day.

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Mergers and Acquisitions for non-US entrepreneurs

These are a few important considerations to keep in mind when going through an M&A transaction that involves a non-US “startup” corporation:

Foreign companies are both benefits and liabilities.

Some countries offer great incentives to develop companies in the form of government programs and grants. Until recently I haven’t had the privilege of experiencing this first hand, but now that I have I can tell you that these benefits come with important strings attached that can potentially become issues at the time of due diligence. 

Why benefits?

For an entrepreneur having access to any type of funds that don’t involve giving away great amounts of equity or any incentive that provides tax cuts is probably a no brainer. After all, this allows for development of the product, service or technology. For the company that is actually acquiring this means access to capital and incentives otherwise unaccessible. 

Why liabilities?

In order to be eligible for an incentive there are usually clauses related to the transactions that might not evidently affect transactions at the time of an M&A. However, the devil is in the fine print and in that not so fine print when it comes to merging acceptable legal terms from different countries. Two of the most critical issues are the transfer of intellectual property and taxation. If you don’t plan this two components from the get go, they could potentially become a deal breaker.

Foreign companies and or subsidiaries make corporate structure a delicate issue.

This is important from the acquirer’s perspective. After all, they are buying a company that lives in an environment they are not familiar with. The best way to minimize the impact is to get proper legal council from people or firms with credibility and experience with related matters. They can help you create a corporate structure that will satisfy investors and companies that might have an interest in yours.

M&As legal fees are not directly related to the size of companies, rather to the complexity of the deal.

One of the sharpest observations I’ve heard came from Michael Glaser from Perkins Coie during a conference call. He said “when we see a mid-size company trying to buy a small startup people usually think, this has got to be the easiest thing in the world. The truth is that legal expenses are not correlated to the size of the companies, but rather to the complexity involving the transaction”. I can’t even enumerate the topics where this holds true. My advice, keep things simple when it comes to your corporate structure, IP and legal related matters.

These are just a few gems I’ve learned and will continue to post as I keep learning.