Chapter 48Final Approval Process
At this point, once the definitive agreement is agreed upon by the acquiring company and your legal team, it is now time to get it approved by your board and then your shareholders. Specifically, there are three pieces of documents that need to be approved, the final definitive agreement, the 280G vote, and if applicable, a management carveout. Let's look at the voters independently.
1. Board Members
Your board should have had a close pulse on where things stand along the way. So when your legal counsel sends over the final documents for approval, there should not be any surprises. The main thing that they care about are the distribution amount as well as schedule and indemnification caps. Your board needs to approve all the documents before they get sent out to the other shareholders. In the case of the management carveout, only a board approval is needed. As stated in earlier chapters, an unanimous decision is desired for all of the approvals.
2. Shareholders
Everybody on the cap table will get notified at this point, and that could include your existing employees who have exercised their shares, or folks who left the company a long time ago. Naturally, everyone would pull out their calculators and see if and how much they will get from the transaction. Expect your phone to blow up with reach out from folks you haven't talked to in a long time. But all in all, 50% of the votes are needed to approve the transaction, and 75% of the disinterested votes are needed to pass the 280G analysis.
Once the votes pass the threshold, now you can close the deal.