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Financing New Ventures by Geoffrey Gregson

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CHAPTER 5

Deal Negotiation and the Deal Agreement

The golden rule is: “he who has the gold makes the rules”.

—­Keith David

Introduction

This chapter examines the deal ­agreement—­identified as the final stage of the investment deal process, as presented earlier in Figure 4.1. Before the deal agreement is finalized, the entrepreneur and investor will usually enter into negotiation over the terms and conditions of the deal.

An investment deal agreement is structured to adhere to the investor’s expected return on investment and to mitigate some of the different types of risk exposure common in private equity investing and also related to ­early-­stage ventures. Different provisions in the deal agreement are also designed to reduce potential problems ...

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