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Funding and exits: local lawyers outline loans, grants, crowdfunding and what sellers should prepare for diligence
Summary
Panelists described non‑dilutive grants, CDFI loans, SBA programs, revenue‑based financing, crowdfunding and securities law constraints on raising investor capital, then reviewed basic M&A steps for business owners thinking about a sale.
Benjie Jones of Smith Anderson and other panelists outlined funding options that Raleigh small businesses can pursue beyond owner cash: bank and SBA‑backed loans, community development financial institutions, revenue‑based lenders and non‑dilutive grants from federal (SBIR, NSF, NIH) and state programs. Jones urged business owners to check local resources such as the City of Raleigh’s small‑business pages and to consider incubators and university commercialization programs for early support.
Rob Hatch, who advises on mergers and acquisitions, said founders should prepare for diligence long before a buyer appears. He recommended hiring counsel and, when appropriate, a broker or investment banker, preparing a due‑diligence document set (cap table, contracts, IP records, employment and payroll records), and understanding the difference between asset and equity sales.
Jones warned that raising money from investors is regulated: offers of stock or other securities usually require either a federal/state registration or a specific exemption. He recommended consulting securities counsel before broadly soliciting investors; a general public solicitation can change which exemptions are available and trigger registration obligations. He also cautioned against paying commissions to unregistered finders and underlined the difference between accredited investors and retail investors, noting thresholds for accredited status described at the session.
Hatch explained terms founders commonly encounter in a sale process, including letters of intent, exclusivity for diligence, purchase agreements, rollover equity (where sellers keep a stake in the buyer), earn‑outs and indemnities. He encouraged sellers to get their “house in order” early—clean books, clear ownership of IP and employment records—because buyers will inspect those areas closely and uncovered risks can reduce price or derail a deal.
Ending: The panel advised attendees to match funding sources to business stage (grants/SBIR for R&D, CDFIs and SBA for capital, private investors for growth), to consult counsel before soliciting investments, and to prepare documentation that buyers will request during diligence.
