Helped Clients Recover Over $25 Billion. Since 1979.
Helped Clients Recover Over $25 Billion. Since 1979.
The equity decisions founders make early, and the documents behind the first money they raise, follow the company through every later round and any sale. The Schenk Law Firm helps founders split ownership, reward the people who build the company, and take in investment the right way.
Founder Equity and Vesting
We set up founder stock or membership units with vesting schedules, so a co-founder who leaves early doesn’t walk away with a full share. We also flag the 83(b) election and its 30-day deadline.
Founder Term Sheets
Before the company is formed, we put the founders’ deal in writing: who owns what, who contributes what, and what happens if someone leaves.
Equity Incentives
We draft stock options, LLC incentive units, and advisor grants, and we coordinate the 409A valuation that option pricing depends on.
SAFEs and Convertible Notes
We prepare and review SAFEs and convertible notes for friends-and-family and seed rounds, including the valuation cap, discount, and conversion terms.
Investment Rounds and Closings
We draft the subscription documents for a round, gather each investor’s signed paperwork, update the cap table, and close. Our investor onboarding guide walks through those steps.
Equity Offers and Grants
If a company has offered you equity as part of a job or a deal, we review the grant and the agreements behind it and explain what you’d be signing up for, including buyback terms, covenants, and tax filings.
Do securities laws apply if only friends and family are investing?
Yes. Selling stock, units, SAFEs, or convertible notes is a securities offering, whoever the investors are. Most early rounds rely on an exemption, which comes with its own rules about who can invest, how the round is marketed, and what has to be filed afterward.
Should we use a SAFE or a convertible note?
A SAFE isn’t debt, so it has no interest rate or maturity date, and it converts to equity at a later priced round. A convertible note is a loan that converts, so it carries interest and a date it comes due. We walk through which one fits your round and your investors.
A co-founder is leaving. What happens to their equity?
That depends on the vesting terms and any buyback rights in your agreements. If nothing was put in writing, we review the company’s documents and work out a separation that both sides sign.
How do we give equity to an advisor or early employee?
In a corporation, that’s usually a stock option or a restricted stock grant. In an LLC, it’s often an incentive unit that shares only in future growth. We draft the grant and the plan behind it so the tax treatment works as intended.
Is an LLC or a corporation better for raising money?
Many outside investors prefer a corporation, and some funds can only invest in one. An LLC can still raise money, and some LLCs later convert. Our entity formation team can help you choose before the first check comes in.
Experience
David Lizerbram has practiced business law for more than two decades. Benjamin Schenk founded and runs a commercial real estate investment and asset management firm.
Formation Through Exit
We form the company and document its equity and each investment. Later, we handle its governance, sales, and buyouts.
Both Sides of the Grant
We represent companies and their founders, and we also review equity offers for the individuals receiving them.
Case Study
A consumer products company organized as an LLC brought in its first outside investors. We prepared the investment documents and a written consent of the members that approved the investment and admitted a new member, and every member signed. We then handled the securities compliance, and the company’s Form D notice was filed with the SEC under Rule 506(b).
Case Study
A growing LLC needed to separate from a co-founder who had agreed to give back his equity for no payment. We prepared a separation and surrender agreement and a written consent of the members that retired his vested units, confirmed that his unvested units had ended, and left every other member’s unit count unchanged. The documents also dealt with three parts of the operating agreement that could have stalled the exit: a consent requirement, a dissolution trigger, and a fair-value buyout right that the departing member waived. Every member signed.
Case Study
A physician joining a medical practice was offered a small profits-interest grant in the practice’s LLC as part of her offer. We reviewed the grant and the LLC agreement behind it, including a buyback price that paid fair value only on a sale of the company and a nominal amount on any other departure. Our letter explained what she would take on by signing, including the covenants, the tax filings, and becoming a member of the LLC. She accepted the position and declined the equity, and we confirmed that no equity obligations remained.
Case Study
A live events company needed outside capital for an artist deposit on a large concert, and the original proposal promised investors a fixed return. Because a fixed return on a business loan can run into California’s usury limits, we restructured the deal so investors are repaid from the show’s receipts with a capped share of the proceeds. We prepared the financing agreements, an investor disclosure statement, and the board consents. Both investors and the full board signed, and we filed a UCC-1 for each investor’s security interest.
Client names and identifying details are withheld. Results depend on the facts of each matter, and past results don’t guarantee a similar outcome.
The Schenk Law Firm is based in North Park, San Diego. We advise founders and companies throughout California. When another state’s rules apply, we coordinate with local counsel.
Entity Formation & Structuring
Choosing and forming the right LLC, corporation, or partnership, and setting up its ownership.
The steps for documenting and closing an investment in a corporation or LLC.
Shareholder, Member & Partnership Agreements
The written rules between co-owners of a corporation, LLC, or partnership.
Bylaws, resolutions, and the records that keep a company in good standing.
Contract Drafting & Negotiation
Drafting, reviewing, and negotiating the agreements a business runs on.
Buying, selling, or merging a business, from the first offer through closing.
Whether you’re splitting ownership with a co-founder, granting equity to your team, or opening a round, we can set up the documents and walk you through each step.
Contact us today to discuss your company’s equity and fundraising.
Request a ConsultationIt’s a filing with the IRS that lets someone who receives stock subject to vesting pay tax on its value at the time of the grant instead of as it vests. It must be filed within 30 days of the grant, and that deadline can’t be extended.
It’s an independent valuation of a company’s common stock. Stock options priced below fair market value can create immediate tax and an added 20% tax for the option holder, so companies use a 409A valuation to set the exercise price.
It’s a short notice filed with the SEC after a company sells securities under the Regulation D exemption. It’s due within 15 days after the first sale, and many states, including California, require their own notice filing as well.
Taking funds before the investment documents are final can leave the investor’s rights unclear and complicate the exemption the round relies on.