Looking for examples / templates for search fund docs

November 15, 2022

by a searcher from Harvard University - Harvard Business School in Draper, UT, USA

I'm a 10 year post MBA professional looking into ETA. I'm weighing the pros/cons of funding my search. I understand the high level details of terms that are typical, but I'd love to see how the industry generally contracts them (e.g., how pro-rata rights are outlined, other important but more minor terms). While I appreciate that each deal may be unique in some way, it seems that there are standards that are mostly adhered to. I'm not likely to want to go a standard route, but want to understand the standard to know where/what I might do differently and where appropriate and why. Any pointers to any templates/resources would be appreciated. thanks

Reply by a professional
from Dartmouth College in Los Angeles, CA, USA

Typically these terms would be in the partnership/operating agreement and it's a bit tricky to rely on templates for these since they are fairly deal specific and complex, But specifically for pro rata it is typical for investors to have pro rata rights to maintain their ownership % in subsequent funding rounds, though not necessarily with respect to employee equity plans. Also likely a ROFR and drag/tag along rights. More nuanced are buyout rights (forced or voluntary). Also need to determine preference on distributions and liquidation, veto rights and general management rules.

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