Counsel for sponsors taking a meaningful stake without taking the wheel, with preferred terms, protective rights, and exit alignment negotiated from a non-control seat so a minority position carries real weight.
A liquidation preference of one times the money, non-participating, is the market term in a growth round, and most of the negotiation is about what happens when the company does not grow into it: a broad-based weighted-average adjustment on a down round, a class vote under Section 242 of the Delaware code before the charter can change, and a redemption right that Delaware will only pay out of surplus. A minority investor's protection is written once, at entry, and tested years later.
You are backing a company the founders will keep running, so the influence you have is the influence you drafted: consent rights over new senior stock and over a sale, a board seat or an observer, and information rights pegged to a threshold you will still clear after the next round. Since Delaware's 2024 amendment to Section 122(18), those rights can live in a stockholder agreement as well as the charter.
We act for the capital side, on the round and on the exemption it is sold under, and we draft for the down round, the departed founder and the sale that favors the common.
Designing the investment vehicle and the preferred-equity stack for a non-control position. We choose the security, size the stake, and set the structure so the economics and the governance both survive the next financing round.
Negotiating and drafting the preferred terms that define a growth round, including liquidation preference, dividend and conversion mechanics, valuation, and the cap table that follows from it, so the headline number and the fine print agree.
Board and observer seats, consent rights over major corporate actions, and the protective covenants that let a minority holder shape, and where it matters stop, the decisions that move its position, without the burdens of control.
Anti-dilution protection, pre-emptive rights on new issuances, and the information and inspection rights that keep the investor seeing the company clearly, each drafted to trigger when the event it guards against occurs.
Tag-along, drag-along, registration, redemption, and put rights negotiated at entry, so the route to liquidity is defined before the founders' and the investor's incentives have any reason to diverge.
Legal and financial diligence on the target and disciplined securities work on the raise, fitting the round to its registration exemption and building the disclosure record the next round and any examiner will read.
A liquidation preference returns the money before the common is paid. Non-participating means the investor then chooses between that preference and converting to share pro rata; participating means it takes both, usually under a cap. Most growth rounds settle at one times non-participating, and an investor who asks for more is pricing a down case.
A minority holder cannot direct the board, so it negotiates a veto over issuing senior stock, borrowing above a stated amount and selling the company. In the charter as protective provisions those vetoes bind every later holder; in a stockholder agreement they bind only the signatories, and the next lead will ask to amend them.
A right to put the shares back after five years reads like a floor. Delaware's Section 160 forbids a redemption that would impair capital, and a board finding funds not legally available may decline to pay, so the right is backed by an accruing dividend, a shift in board control or a forced sale.
Broad-based weighted-average protection adjusts the conversion price on a down round by the size of the cheaper issuance relative to the whole capitalization; a full ratchet resets it to the new price however small the round, and is rarely agreed. The carve-outs matter as much: option pool increases, note conversions and acquisition shares adjust nothing.
Most growth rounds are sold under Regulation D. Rule 506(b) bars general solicitation and allows up to 35 non-accredited but sophisticated purchasers; Rule 506(c) permits public marketing if every purchaser is accredited and the issuer takes reasonable steps to verify it. Either way the antifraud rules apply, and a bad-actor event disqualifies the exemption.
A pay-to-play clause converts the preferred of an investor who declines to fund a down round into common, or strips its anti-dilution and consent rights. It is agreed in the good round, when nobody expects to use it. The pro rata right decides whether this round's investor keeps its percentage in the next.
Before diligence spends a dollar, the term sheet fixes what matters most: the security, the liquidation preference, the conversion mechanics, and the valuation the cap table will inherit. We pressure-test the headline number against the fine print, because a preference drafted loosely here is renegotiated by the next round's lead.
Legal and financial diligence on the company runs alongside securities work on the round itself, fitting the raise to its registration exemption and building the disclosure record. What diligence surfaces is priced into the protective-rights package as well as the valuation.
The purchase agreement, the amended charter, and the investors' rights, voting, and co-sale agreements are drafted as one machine. Consent rights over major actions, anti-dilution and pre-emptive rights, board or observer seats, and information rights are each written to trigger when the event they guard against arrives.
Closing starts the years the documents were written for. We police consent triggers through follow-on rounds, recaps, and founder departures, and when liquidity comes, the tag-along, drag-along, registration, and redemption rights negotiated at entry determine how the minority leaves, riding the exit or carried out of it.
In a minority position, the influence you have is the influence you drafted.
A growth or minority equity investment is a capital commitment that buys less than a controlling stake, typically to fund expansion in a company the founders continue to run. Because the investor does not control the board, the protections live in the documents: the preferred terms, the protective rights, and the governance package that define what a minority holder can require and what it can stop.
Control is the difference, and it changes where the terms live. A buyout sponsor owns the board and writes its own governance after closing. A minority investor negotiates everything at closing, because afterward it can only vote, consent or sell. Its board seat is one vote among several, its consent rights are a list of acts the company may not take without it, and its exit rights, drag, tag and registration, are how it leaves a company it never controlled. Information rights are the only reason it will know a problem exists. A buyout fixes governance by owning it. A growth investor fixes it by drafting.
The core set includes consent rights over major corporate actions, anti-dilution protection, information and inspection rights, pre-emptive rights on new issuances, and registration or exit rights such as tag-along, drag-along, and redemption provisions. The right package depends on the size of the stake and the investor's bargaining position, and each provision is drafted to operate when the moment it was written for arrives.
We settle at signing the three ways the investor can leave. A drag-along lets holders above an agreed percentage, often the preferred as a class or the preferred and a board majority together, require everyone to sell, with a floor price and a limit on the indemnity any dragged holder gives. A tag-along lets the investor join a founder's sale on the same terms. Registration rights, demand and piggyback, with a lock-up after an initial public offering, cover the listed exit. A redemption right stands behind them for the company that neither sells nor lists, drafted with the surplus limits of Delaware law in mind.
Our private capital practice acts for the capital side: sponsors, funds, and family offices deploying into growth and minority positions. We bring the investor's perspective to structuring, term-sheet negotiation, diligence, and the protective-rights package, and we hold securities compliance throughout so the position is defensible to the next round and the next examiner.
Almost every growth round is a private placement under Regulation D, which exempts it from registration but not from the law. Rule 506(b) permits sales to accredited investors and up to 35 sophisticated non-accredited purchasers with no general solicitation; Rule 506(c) permits general solicitation if every purchaser is accredited and the issuer verifies it, which since 2025 can be done through minimum investment amounts with written representations. An individual is accredited at $200,000 of income, $300,000 with a spouse, or $1 million of net worth excluding the home. Form D is filed within 15 days of the first sale, state notice filings follow, and the antifraud rules apply to every statement in the data room.
Control acquisitions and public-to-private transactions, with the structuring, financing, and governance work for sponsors taking the wheel rather than a seat.
Explore →Side-by-side and syndicated investments, covering co-investment terms, allocation, and the inter-investor arrangements that govern capital deployed alongside a lead.
Explore →Stewardship of a position through its holding period and out the other side, from governance and follow-on rounds to the route to liquidity for sponsors and funds.
Explore →Direct and co-investment counsel for family offices, with the structuring, governance, and long-horizon terms that fit patient, principal-aligned capital.
Explore →Reviewed by Jonathan D. Herpy, Sr., Senior Partner · Last updated October 2026 · Educational overview · Not legal advice
One partner is accountable for the whole matter, and you have that partner's direct line. Chicago, London, and Dubai work to the same standard.