Stradley Ronon CLE Webcast: Unpacking the Corporate Transparency Act

As of January 1, domestic and foreign entities registered to do business in the United States must comply with new beneficial ownership reporting requirements imposed under the Corporate Transparency Act (CTA). View our webcast from January 30 on “Unpacking the Corporate Transparency Act,” during which panelists answer looming questions, including: Which entities are subject to reporting requirements? Who counts as a “beneficial owner”? What level of “substantial control” is required? How do you calculate the 25 percent ownership test? What constitutes a “filing” to determine if an entity is a “filing entity”? Watch the webcast and download the slide presentation.

The Times for PE and VC Transactions Are A-Changin’: 2024 Challenges in Employment and AI

Partner Lori Smith and associate Evan Poulgrain have authored the second in a two-part series for Reuters Legal News exploring key items that should be on the radar of private equity and venture capital funds and their portfolio companies for 2024 and beyond. In this last installment, Lori and Evan focus on the changes in the law relating to enforceability of restrictive covenants and legal issues surrounding artificial intelligence. Read the full article.

Stradley Ronon Advises Mini Melts in Investment by Altamont Capital Partners

A cross-practice team of Stradley Ronon lawyers represented Mini Melts USA, a producer and distributor of novelty ice cream products headquartered in the Philadelphia area, in the acquisition of a controlling interest by Altamont Capital Partners. Altamont Capital is a Palo Alto, California-based private investment firm with more than $4 billion in assets under management. Altamont Capital partnered with Mini Melts to provide growth capital and support an expansion of its distribution footprint and manufacturing capabilities. Mini Melts’ CEO and founder will remain in his role and as a major investor alongside Altamont Capital and the company’s existing shareholders. For more information on the deal, read this Wall Street Journal article. (Subscription required.)

Stradley Ronon Represents Team Epiphany in Acquisition by Stagwell

Stradley Ronon advised Team Epiphany, a consumer marketing agency based in New York City, in its acquisition by Stagwell, a digital-first global marketing network. Founded in 2004, Team Epiphany is a BIPOC-owned-and-operated firm that specializes in cultural relevance, experiential marketing and influencer integration. The terms of the transaction were not disclosed. Team Epiphany will join Stagwell’s Constellation network, a collective of best-in-class marketing agencies. For more, read Stagwell’s announcement.

From the Editor

The venture capital and emerging company communities were rocked last week by the collapse of Silicon Valley Bank (SVB) and the subsequent collapse of Signature Bank. While the federal government stepped in on Sunday to assure depositors that all insured and uninsured deposits are safe and SVB is up and running through a newly formed bridge bank in an almost business-as-usual fashion in the US, the reality is that the future is unclear for the bank on which much of the community has depended for over 25 years. There is still much to learn about the situation beyond the obvious that has already been widely reported. The coming weeks will uncover more about the who, what and why of what happened; what can be done to shore up the US banking system further and avoid similar situations in the future; and whether SVB will be sold in whole, in parts, wound down or file for bankruptcy (among the many options). However, one thing that is certain at this point is that this changes the landscape in the near term for both debt and equity venture financing – the loss of SVB as a significant player, especially in the venture debt space, is a void that needs to be filled by viable alternatives beyond the current alternative of much more limited, costly, private debt sources. I sincerely hope the community pulls together to ensure minimal fallout, not just financially but to the lives of individuals who devoted themselves to supporting the emerging company community. Stradley Ronon will be monitoring this situation closely, and we are available to assist clients impacted by this situation. Sincerely, Lori Smith

Petabyte Technology Inc. Acquired by Chewy Inc.

Stradley Ronon represented Petabyte Technology Inc., a provider of cloud-based technology solutions to the veterinary sector, in a $43.4 million acquisition by Chewy, Inc., an online provider of pet food and treats, pet supplies, pet medications and other pet-health products and services. The acquisition is expected to further strengthen Chewy’s pet healthcare product and service offerings.

OECD Crypto Tax Framework To Require $50,000 Reporting Threshold for Crypto Service Providers

By Christopher Scarpa and Jin Park The Organization for Economic Cooperation and Development (OECD) issued Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard, in which OECD proposes to modernize tax administration and reporting requirements for cryptocurrency. The framework would make crypto-assets exchanges, brokers, dealers and ATMs subject to reporting on behalf of customers. The framework is expected to provide authorities with the tools to crack down on money laundering and tax evasion. Four types of transactions would be subject to the reporting requirement under the framework: exchanges between crypto-assets and fiat currencies, exchanges between one or more forms of crypto-assets, reportable retain payment transactions and other transfers of crypto-assets.

How ESG Is Changing the M&A Landscape

ESG has graduated from a reference in the financial statements of major corporations to a barometer for the health and long-term prospects of any business valued by investors Understanding the growing importance of environmental, social and corporate governance (ESG) in the world of mergers and acquisitions requires looking no further than social media. Countless posts on these social platforms demonstrate society’s rising concerns around sustain- ability standards and corporate accountability. In fact, Elon Musk’s recent attempt to acquire Twitter is the perfect example of the reach that ESG has in today’s M&A market and the broader business world. Twitter is the most high-profile acquisition on the rocks right now. While the primary reason Musk has cited for backing away from the deal is his allegation that the social media platform is infected with bots that impact fake news and, ultimately, the company’s valuation, he has pointed to diversity concerns. “Musk has tweeted frequently about Twitter employing workers who are insufficiently diverse in embracing a wide variety of viewpoints and perspectives,” says Dr. Michael Kraten, an ESG expert and professor of accounting at Houston Baptist University. “Ironically, the lack of diversity that he mentions involves a lack of conservative and libertarian representation.” He suggests Musk’s concerns represent issues around the G in ESG. The components of ESG that are most in vogue are constantly shifting, but investors and companies alike have moved beyond viewing the standards as just another item to check off in the deal process to something that adds intrinsic value. Politics, ever-changing regulations and even the economic environment may color the way deals are evaluated at any given time. Still, the importance of ESG continues to grow, with the European Union leading the direction for where standards are heading. While countless metrics and organizations specializing in ESG due diligence have sprung up to meet rising demand, a major gap remains in the criteria used to rate ESG for major organizations and middle-market companies. As general partners and limited partners struggle to sift through the myriad components that comprise today’s ESG, one thing is clear: It isn’t going away and social pressures are proving to be the greatest driver of ESG adoption.