

Say someone wants to buy Loopt for $20MM... - aswanny

Can Sam  go back to the investors and say, "Here's your money back plus x, I'm doing it" since he has the majority ownership?  Can you structure a deal such as long as they get the investment back, you can sell at whatever price you want?
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pg
That's not even the right number of digits, incidentally.

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aswanson
I figured as much but put out a lowball figure purposely to ask the question,
"Can a founder get out by paying back investors (invested sum), taking the
money and running?"

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pg
As s_baar says

<http://news.ycombinator.com/item?id=38560>

the short answer is no, because funding deals almost invariably include a veto
over acquisitions, regardless of who has what percent of the stock. There may
also be a liquidation preference that says the investors get n times their
money back first in any sale.

The slightly longer answer is that it's not that simple, because if you
_really_ want to sell and you're essential to the company, you can in effect
threaten to go on strike if they exercise their veto, and then you'll all end
up with less. As long as founders are essential to the company, they have a
lot of power. So in practice they may be able to talk investors out of
exercising their veto (though not their liquidation preference).

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s_baar
Usually institutionalized investors have agreements in the term sheet
specifying under what conditions the founder can sell. Someone else will have
to tell you what those terms are exactly, though.

