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Resources for Equity Transactions and Planning: Part 2 - Firmex Deal Room

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Firmex Virtual Data Rooms and Document Collaboration

I'd like to share with our Corporate Focus and Equity Focus users three great resources that I recommend for equity planning, equity transactions, and understanding equity instruments. Our customers have used all of these, and I want to make sure the Two Step community is aware of them. This is Part 2 of a three-part series.

If you're looking to create a virtual deal room for your next equity transaction, you'll want to check out Firmex: www.firmex.com. This is a SaaS deal room application that has been used by many of our law firm customers for transactions of all sizes. Firmex features a unique "all you can eat" pricing model that allows you an unlimited number of deal rooms. If you're a law firm with a lot of clients that do equity or M&A transactions, Firmex can be very attractive - and even better, your ROI increases the more you use it. You can even private-label the application to reflect the branding of your firm's website.

The Firmex website says:

"With its virtual data room solutions, Firmex helps organizations securely share confidential information and collaborate online. Since 2006, Firmex has been licensing its on-demand virtual data room technology for corporate transactions, contract management, litigation, governance and compliance. Firmex focuses on delivering highly secure, reliable, fast and intuitive document-sharing technology with top-tier, 24/7/365 support and security."

When comparing the tool to other options, one Firmex law firm client says: "Firmex allows us to provide a valuable service to our clients at a significantly lower price than other third-party providers. The features, functionality and reliability of Firmex rival or exceed other providers and the customer service is excellent."

If you're doing equity transactions of any type and need a virtual deal room, take a look at Firmex. They'll get you up and running fast - and help you make a winning impression on your clients.

And here's more good news: with the export feature in Corporate Focus, it's easier than ever to move large collections of entity, ownership, governance and compliance documents from Corporate Focus to Firmex and meet the tight deadlines of your next due diligence request.

Proven Strategies for Improving Your Legal Compliance Scorecard?

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Proven Strategies for Improving Your Legal Compliance Scorecard? At a recent Two Step webinar, Craig Newfield, Vice President and General Counsel of Gomez, Inc., and Mark Martines, Executive Vice President and General Counsel of Jenzabar, Inc., presented an excellent framework for improving and assessing legal compliance at venture-backed, high-tech companies.

At these types of companies, there is inherently a tension between activities that increase sales and profits and those that improve legal compliance since they each naturally compete for limited resources. The unstated question that tends to exist in some form is something like: “Should we take the time to improve our stock option approval process if that is going to take time away from negotiating a sales contract?” Or, “Should we formalize our development processes to insure that shareware that is used in our code is used in compliance with the specific license agreements?”

Those are the types of real questions that growing technology companies face every day as they grant new options or develop new code and where the problems faced by careless compliance will not be apparent until due diligence begins for the next round of investment or an acquisition. But, if compliance issues are uncovered, they can throw a monkey wrench into a deal just when you were hoping everything would go smoothly and not increase the level of scrutiny by the investor’s team of lawyers, accountants, and technology detectives.

The panel discussed the compliance benefits related to both enterprise risk reduction and value creation:

  • Reduced risk of errors and irregularities
  • Minimized risk of fraud
  • Reduced risk of litigation
  • Reduced costs of operational inefficiencies
  • Minimized due diligence risks
  • Increased regulatory compliance
  • Improved contractual relationships
  • Improved operational efficiencies
  • Increased credibility with stakeholders
  • Maximized value of the business

But, where do you start? The presentation quoted Richard Steinberg of Steinberg Governance Advisors and the former corporate governance practice leader at PwC for his recommendation to ask the right questions:

  • What are the most significant risks facing the company?
  • What are we doing about them?
  • Are our senior management and directors apprised of all material risks?

And how to you get the right answers? The panel suggested requiring senior management and those who report to them to sign “Section 302-like” certificates that certify to legal compliance and appropriate internal controls as far as their respective business activities and information that flows up to the financial reports. Guidance can be found in Sarbanes-Oxley and the COSO framework, but it must be used appropriately since neither are a requirement for non-public companies.

The five sections that make up a typical compliance scorecard and were discussed in the webinar with real-life examples from their experience are:

  • Corporate Governance
  • Fraud Prevention
  • Records Management
  • Protection of Assets
  • Compliance with Laws

While their perspective was based on their own experience at venture-backed, technology companies, certainly the compliance framework that they developed could be used by any company that is not required to comply with Sarbanes-Oxley.

Although compliance remains challenging and can be a complex balancing act, the lessons learned from companies that have been through the investment and acquisition process are that a well thought out framework and an appropriate level of effort as applied to the unique circumstances of each organization will provide an excellent ROI whether measured by risk avoidance or enterprise productivity.

The recorded version of the webinar and the related white papers are available here.

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