PRACTICE AREAS
Practice Areas
Practice Areas

Venture Capital


Practice Leader: Michael H. Friedman

Breaking into the market with a new idea or product is never an easy process. When seed and late-stage companies seek the help of venture capitalists to expand, the return on investment can be phenomenal. It’s a high-risk adventure to those who know the game, and to play well, it helps to have someone on your team who knows all the rules. Pepper Hamilton LLP has that knowledge, and the experience of representing venture capital, public and private buyout firms, and public employee pension funds in hundreds of investments in seed, early and late stage companies, mezzanine investments and leveraged buyouts.

We represent general partners and investors in fund formation, domestic and foreign tax planning, fund investments in portfolio companies, and the public and private sale of portfolio company investments. When the time comes to move on to a new investment, venture capital clients count on Pepper to help achieve a liquidity event. We’re experienced in a variety of divestiture transactions, including mergers and acquisitions, initial public offerings, management buyouts and private equity sales.

Choosing to acquire an interest in a seed or later-stage company means choosing to invest in its corporate structure. Our work includes assessment of capitalization, organization formation, suitability of articles of incorporation and legal standing. Our knowledge can help venture capitalists restructure a target company to provide greater value. We also counsel on building alliances with other venture capital participants in the transition.

When you hire Pepper, you gain access to a vast repository of institutional legal and business knowledge, and a large network of valuable business contacts. Among our attributes, Pepper has one of the leading national practices involving the formation and operation of Small Business Investment Companies (SBICs).

At Pepper, we strive to be valued partners and contributors to the investment success of our venture capital clients.

Pepper’s representative engagements include:

  • Healthcare Ventures (the largest U.S. biotechnology venture capital fund) in financing, public offering, merger and acquisition and portfolio company collaborative transactions
  • EnerTech Capital Partners in a series of transactions
  • TL Ventures in a series of transactions
  • LLR Equity Partners in a series of transactions
  • Baker Capital in a series of transactions
  • NEPA I, NEPA II and Mid Atlantic Venture Fund, L.P. (early stage venture equity funds) in a series of transactions
  • a majority shareholder (venture fund) in connection with the merger of one of its “portfolio companies” into a British company with securities traded on the London Stock Exchange
  • a major international buy out company that manages many investment funds (both foreign and domestic) in the purchase and purchase financing and disposition of companies and interest in companies
  • Blue Rock Capital (a $55 million early stage fund) in its investments in start up and early stage technology companies
  • Advent International Corporation (LBO fund) in a series of transactions
  • Charterhouse Group International, Inc. (several funds for LBO transactions and project finance) in a series of transactions
  • TDH (middle stage venture and LBO fund) in a series of transactions
  • Kline Hawkes California, L.P. (Los Angeles-based venture fund and its SBIC affiliate with approximately $120 million in capital)
  • Safeguard Scientifics, Inc. in a series of transactions
  • Trimas Corporation (New York Stock Exchange listed company) in acquisition work.
Our core practice includes:

Mergers and Acquisitions

Pepper can assist in structuring, negotiating and documenting a wide range of merger and acquisition transactions. Our clients include entrepreneurs, domestic and international corporations and financial institutions engaged in acquisitions and divestitures involving publicly traded and closely held business organizations.

Among other engagements, Pepper lawyers have:
  • acted as counsel to one of the Mid-Atlantic region’s largest full-service real estate companies, in its October 3, 2005 execution of a merger agreement through which our client acquired a Dallas, Texas-based self-administered, self-managed real estate investment trust, in a transaction valued at approximately $3.3 billion. The transaction raised our client’s profile as one of the largest REITs in the nation, with more than 49 million square feel of office space under management.
  • represented one of the world’s largest private equity firms, in its July 2005 acquisition of a global drilling services business.
  • represented a large private equity firm in its July 2005 acquisition of a global injection molding business.
Initial Public Offerings

We have assisted numerous businesses planning or executing initial public offerings with developing stock-based compensation plans for senior and middle management.

In 2005, Pepper:
  • represented a leading provider of digital maps used in auto navigation systems and mobile devices, in its initial public offering of 40 million shares of common stock priced at $22 per share, and a secondary offering of 30 million shares priced at $37.50 per share
  • represented a leading Mid-Atlantic venture capital firm, in connection with the sale of 1,750,000 shares of a public weight loss company, on June 7, 2005
  • provided special Delaware counsel to a Delaware corporation which developed an intravascular MRI catheter for high resolution MR imaging of the coronary arteries, in its August 25, 2005 initial public offering. Pepper served as corporate counsel and drafted significant portions of the prospectus as well as the issuer’s charter documents incorporating numerous Israeli corporate and securities provisions.
  • represented a partnership in the completion of its December 20, 2005 underwritten offering of $300 million 5.625 percent Notes due in 2010.
Management Buyouts

Pepper lawyers have assisted financial and strategic investor groups in completing venture capital investments, including management buyouts, recapitalizations, leveraged buyouts, and asset and stock acquisitions by portfolio companies.

Private Equity Sales

Our private equity representations include all types of venture capital investments (common, preferred, pseudo-preferred and debt), leveraged buyouts and follow-on acquisitions, as well as counseling with respect to implementing best practices regarding portfolio company governance and operations. We also assist clients in participating as possible purchasers in buy side auctions.

Our transactions involve a multitude of industries, including financial and business services companies, software developers, biotechnology companies, health care-related companies, retailers, distribution businesses, e-commerce companies, Internet service providers, industrial manufacturers and other traditional “brick-and-mortar” companies. When the company’s business is technology-driven, we work closely with our intellectual property lawyers to evaluate the technology and advise our clients as to the associated legal and other risks.

Technology Matters

Whether a portfolio company’s business uses technology or is technology, we have experienced business lawyers and advisers; patent lawyers, scientists and other intellectual property experts; skilled litigators; and lawyers knowledgeable in government regulations that can be called upon to assist as needed. Our lawyers have experience in a range of technology intensive industries, including automotive; telecommunications, computer hardware, software and other information technology; health care; biotechnology; pharmaceuticals; defense; financial services; energy; entertainment and media; Internet; business services; consumer goods; and manufacturing.

Pepper’s skill and experience in resolving the legal and business issues faced by technology producers and technology consumers sets us apart from the competition. Clients have access to all the resources and rich knowledge of a large, sophisticated firm that has helped businesses succeed for more than 115 years. As a business grows, we can tap into the talent of more than 500 lawyers in multiple practice areas to keep pace with and anticipate issues.

E-Commerce

E-commerce is the focal point of many emerging businesses. We represent information technology and solutions providers who build the infrastructure supporting e commerce, and the venture capital firms that invest in it. We represent e-commerce companies in a wide range of industries, including online banking, communications, computer software, insurance, manufacturing, pharmaceuticals, retail and telemedicine. Our practice combines traditional commercial, litigation and regulatory legal services with a thorough understanding of Internet legal issues and the related technology.

Our experience spans the gamut from providing advice on basic corporate governance issues, to protecting and commercializing intellectual property assets, to counseling companies regarding a range of complex commercial relationships with other online companies. We are familiar with Internet legal issues such as data privacy and security; Web site disclaimer language to lessen potential liability; issues regarding linking and framing; “spamming;” issues related to online contests and sweepstakes; Securities and Exchange Commission regulation of online securities trading; and Federal Trade Commission regulation of e-commerce activities.

Intellectual Property

Our intellectual property attorneys comprise an interdisciplinary team that procures intellectual property rights, and litigates, counsels and uses alternative dispute resolution to resolve our clients’ intellectual property problems. Members of the group are capable and experienced in all intellectual property areas, including patents, copyrights, trademarks, trade secret protection, licensing, unfair competition, false advertising, and defamation, publicity and privacy issues. Added to these legal areas are recurrent problem areas such as computer-related transactions and litigation, telecommunications, domestic and international technology transfer, author/publisher relations and U.S. government proprietary rights regulation. In all of these areas, we are involved in counseling, litigation and, where possible, alternative dispute resolution.

Labor and Employment

A business’ workforce is often its most important asset. We assist with a wide variety of employment and human resources issues, from assessing employee policies and procedures to assisting in implementing sensible practices in this area. We help clients solve all types of employment-based problems, ranging from collective bargaining disputes to wrongful termination litigation and complex employment issues in takeovers and corporate reorganizations. Although we emphasize minimizing risk and avoiding liability, we are experienced and capable in all aspects of employment litigation. When disputes do occur, we find creative ways of dealing with them, including alternative dispute resolution techniques.

Executive Compensation/Employee Benefits

Attracting and retaining top executives and employees to a growing business is crucial to success. We counsel businesses on executive employment and severance agreements, equity-based compensation programs, and supplemental executive retirement and deferred compensation programs. We work on benefits and compensation aspects of corporate transactions, which include negotiating representations, warranties and indemnifications regarding employee benefit plans, resolving change in control agreements, conversion or cash-out of stock option or other equity-based compensation vehicles, and the restructuring of compensation arrangements and other benefit programs for the new, combined or surviving business.

Real Estate

As a business grows, it may need to expand to new and larger facilities. We help clients with the development, acquisition, disposition, leasing, financing, construction and syndication of industrial, commercial and residential real estate; real estate loan and partnership work outs, foreclosures and bankruptcies; zoning and land use; and real estate taxation.

Tax

We assist clients with tax issues involving corporate acquisitions, dispositions, reorganizations, restructurings, liquidations and structured finance vehicles. Our tax lawyers are integrally involved in the structure and formation of partnerships used as acquisition vehicles as well as investment partnerships formed as buyout funds, investment vehicles, hedge funds and blind pools. The tax practice also encompasses significant international matters, such as inbound and outbound acquisitions and dispositions, foreign tax credit planning, cross border leasing and analysis of transfer pricing issues for multinational corporate groups. We handle sophisticated income, estate and gift tax planning for closely held corporations, their executives and their owners, including issues associated with limited liability companies and partnerships.


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