December 15, 2015

Our Mini-Theme: Small Business Capital Formation

Thomas J. Walsh Jr.

The Middle Market and Small Business Committee (MMSB Committee) is pleased to sponsor this Small Business Capital Formation mini-theme issue of Business Law Today

The mission of the MMSB Committee is to serve, educate, and bring together business, transactional, and securities lawyers who regularly counsel and advise small and midsize enterprises controlled by families, entrepreneurs, private equity and venture capital firms, and other privately controlled groups, and smaller publicly held companies. We focus on the entire business “life cycle” of our clients, including (i) entity organization and owner agreements; (ii) capital formation, financing, and strategic partnering; (iii) employment and compensation matters; (iv) intellectual property protection; (v) corporate governance; (vi) securities law compliance; (vii) international expansion and cross-border transactions; and (viii) business combinations, exits, restructurings, and breakups. The MMSB Committee helps its members learn best practices in these areas and to stay abreast of current developments. This mini-theme issue exemplifies the breadth, diversity, and expertise offered by members of the MMSB Committee. 

The six articles presented here address only a small portion of the myriad issues that fall within the life cycle of a business: capital formation. But the importance of capital formation to every business, especially in the early years, speaks for itself. This is an exciting time for raising capital with new online crowdfunding, peer-to-peer lending, and other capital raising portals popping up every day. But this is a challenging time as well as regulators must balance the desire of entrepreneurs and small businesses to raise money quickly and efficiently with the need to protect consumers from scams. 

And the topic of capital formation is and has been an area of critical importance to our MMSB Committee. The best example is probably the SEC’s annual Government-Business Forum on Small Business Capital Formation which was a leading force in the SEC’s adoption of Regulation D, which includes Rule 506, the safe harbor from registration with the SEC under which the preponderance of private offerings are conducted. This year was the 40th year of the forum and a result of past MMSB Committee initiatives. 

A present MMSB Committee initiative, through our Private Placement Broker Dealer Task advocates a simplified registration system for finders of financing for early stage companies. The article written below by Linda Lerner and Eden Rohrer, the Task Force Chair and the Task Force Vice-Chair (respectively), provides an excellent overview of the tenacious efforts that have been undertaken by this task force and its members during the past several years. As noted, difficulties still lie ahead in getting additional guidance and legislation passed, both on a federal level as well as on a state level, that we believe will make it easier and safer for smaller companies to use finders to help raise essential funds. The other five articles are equally informative, and we hope that you will find them to be useful to you and your practice. 

The MMSB Committee is an inclusive and collegial group, and I encourage you to get involved (or to become more involved!), not only with our MMSB Committee and its various subcommittees, which allow you to tailor your participation to programs and activities that are of more use to you, but also with the Business Law Section of the ABA. Some new, upcoming projects that the MMSB Committee is very excited about include (a) the development, in consultation with the Corporate Counsel Committee, of a series of “triage” educational programs for experienced outside and inside general counsel, and (b) our Short-Form M&A Documents Task Force. 

How can you become involved? First, you should join the MMSB Committee today. Any BLS member may join the committee for free here. Second, and equally important, you should register for the Business Law Section Spring Meeting, to be held in Montréal on April 7–9, 2016, by clicking here. This will give you the opportunity to come and see firsthand what we have to offer and what you have been missing. All in beautiful Montréal. The lunch and dinner of the MMSB Committee will provide our members with an opportunity to catch up with friends and business lawyers from around the world. 

You can always contact me directly at or (203) 319-7145, if you have any questions regarding membership in the Middle Market and Small Business Committee. 

Thank you for your interest and support. I hope you enjoy these articles and I look forward to seeing you in Montréal!

Additional Resources

For other materials on this topic, please refer to the following.

Business Law Section Committees

Middle Market and Small Business Committee

Thomas J. Walsh Jr.

Thomas J. Walsh Jr.
Chair, Middle Market and Small Business Committee