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For the past few years, Silicon Valley has anticipated a period where plentiful venture capital funding dries up and startups with not-yet-profitable businesses must make it on their own.

For many start-ups, this will mean having to sell at a discount or to accept money at significant discounts to the valuations of their prior financing rounds, or suffer the ultimate ignominy of shutting down the company. The expected coronavirus-induced recession may well be the start of that period.

This article, first published on Bloomberg Law, is the first of a two-part series for buyer and investors on how to structure transactions for distressed start-ups. It will cover mergers and acquisitions transactions; the second part of this series will cover investments.



Derek Liu is a partner in Baker McKenzie's San Francisco office. Derek handles mergers and acquisitions, and other complex corporate transactions, and has signed transactions with an aggregate transaction value of more than USD 110 billion. Prior to joining Baker McKenzie, Derek practiced at two top-tier firms in San Francisco and New York.