In a difficult financial climate many investors are looking to de-risk their investments and take advantage of their strong negotiating position by negotiating instruments such as convertible loan stock (which carry the more limited exposure of debt while also having the potential to be as rewarding as equity).

There are also some complicated shareholder restructurings taking place as technology companies who have already been invested in find further investment from new investors. These restructurings have to be managed carefully especially if the value of the company has declined between investment rounds. Relationships between the old investor and the new have to be handled with sensitivity.

Management Buy Outs are also becoming more common with management buying back stock from VCs who have decided that any other form of exit is unrealistic in the short to medium term.

With the public markets being unreceptive to technology companies recently some public quoted companies are looking to go back into private ownership. This is because a stagnant and depressed stock market does not provide the same capital raising opportunities that the private capital markets can.

We are also seeing an increasing number of cash out deals where founder shareholders release existing equity for cash. One of the main drivers for this is taper relief on capital gains, which allows entrepreneurs who set up their companies 3 or 4 years ago to enjoy favourable capital gains tax rates if they dispose of some of their shares.

However VC's views towards cash out deals are fairly polarised. Some VCs see cash out deals as a good way of getting good value equity. Others see it is a de-motivator for an entrepreneur.

As an entrepreneur wishing to cash out some of your shares you have to know early on which camp each VC sits in. We can help you select the right VC.

For further details please contact us.

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