Deal structuring

by Vishal Patel
(Delhi)

What actually is deal structuring? how it is carried out? what factors influences deal structuring?
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Answer
Vishal, You have really opened a can of worms with this question. "Deal structuring" refers generally to the kind of deal that you make with venture capitalists and angel investors. There isn't much negotiating with a bank, so there isn't much to "structure" there.

There are a lot of considerations in structuring a deal, such as:
~ Amount of stock to be issued;
~ Kind of stock to be issued;
~ How much money is to be invested;
~ When the money is to be invested;
~ Board representation;
~ Approval of other investor deals;
~ Second and third round options,
~ Ownership of patents, etc.

... and just lots more. There are whole books written about the "art of the deal". One of them is titled just that.

If this whole subject is new to you and your team, I would recommend first that you do some reading on it. Find Guy Kawasaki's blog and read it cover to cover. Then sit down with a knowledgeable attorney or accountant and run over what you really have to offer, and what your defined assets might bring in the deal making. The stronger you are before you make the deal, the better the deal you can make.

CJ and the Business Plan Master Team