Younger details restructuring Accolo's preferred shares into common via notes
John Younger · 989 How This CEO Split His Company and Cleaned Cap Table At Same Time · Apr 9, 2018 · at 7:34
HireMojo CEO John Younger explains the corporate structuring used to eliminate preferred liquidation rights and split Accolo tax-neutrally.
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“So to do that, we issued notes to the preferred shareholders and the warrant holders. So that created a note and transferred their stock to all common. And then the new company was created by assuming some portion of those preferred notes. So the acquiring company was able to basically buy the assets in this case of the recruitment process outsourcing business with no cash out, but simply by assuming notes. So the end result was Hiremojo has the original corporate structure, but all common shares. Ecolo Business Services exists and is all flat from a, from an ownership standpoint, and all this was done in a way that was tax neutral.”
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Younger: Accolo raised $4M in 2007 and reached $2M/quarter
“Raised money in 2007. Nathan Latka: How much? John Younger: About four million. And we ended up getting to a place where we're hitting about two million a quarter and growing quickly right when the bubble burst in 2008, 2009.”
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“Yeah, it's probably closer to two.”
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“Right now, it's about 1700 bucks.”