Steele Weighs in on What Happens When Investors and Founders Collide

At the International Bar Association’s annual conference in Sydney, partner Myron Steele participated in a panel titled “When Investors and Founders Collide: Preventing, Diffusing and Resolving Disagreements About Corporate Strategy, in Good Times and in Times of Financial Crisis.”

The panel covered a broad range of topics, including:

• Governance best practices to avoid deadlock or prevent a veto situation that could paralyze the company
• Funding through revenue or investment: anticipating mechanisms for additional capital contributions that address anti-dilution concerns while realistically providing cash-flow support in times of financial crisis, or at times when the founder and other constituencies disagree on a growth strategy
• Consideration of how related party transactions affect the dynamic
• The additional stress placed on the decision-making process if the company also faces a time of financial crisis when the consideration of insolvency or bankruptcy concepts comes into the equation, and planning for 'distressed funding' options
• Lawyering in times and crisis, identifying 'who is the client' and the use of special committees

The multinational panel included representatives from Australia, Brazil, France, Switzerland and the U.S.

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