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.

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