Setting up a US company

When setting up a US company, the first decision is between an Inc. and an LLC: an Inc. is suitable for companies with multiple rounds of investment and a traditional share structure, whilst an LLC offers greater flexibility in terms of profit distribution and taxation, without the formalities of a public limited company. Then there is the choice of state: Delaware offers a well-established, predictable corporate law framework, but it is not automatically the right choice for every venture – companies operating in another state often have no choice but to seek foreign qualification there.

We support you throughout the incorporation process, from deciding on the legal form and location right through to the day-to-day running of the company: we provide a one-stop service for drafting the articles of association or operating agreement, structuring the shareholder base and aligning this with your German structure. The result is a US company that fits your business model right from the start.

The acquisition or issue of shares in a US company requires a shareholders’ agreement governing voting rights, information rights and cooperation between shareholders. In the event of capital increases or new rounds of investment, anti-dilution provisions determine how your shareholding will be affected by future financing – an issue that should be clarified before signing, not afterwards. In the case of joint ventures, there is also the matter of the allocation of decision-making powers and profits between the partners, which often differs from German shareholder arrangements.

Equally important are clear exit rules: pre-emption rights, co-sale rights and the valuation of shares in the event of a separation determine how a subsequent exit will be handled. We draft investment and joint venture agreements that address these issues from the outset and align them with your German group structure.

The purchase or sale of a US company begins with a letter of intent, which sets out the key terms of the transaction before the actual due diligence process begins. During this due diligence phase, legal, financial and operational risks are identified – the findings are incorporated directly into the purchase agreement and the representations and warranties agreed therein, which allocate liability between the parties following closing.

We support transactions from due diligence through contract negotiation to the closing process: purchase price adjustments, conditions precedent and the transfer of shares or assets. In doing so, we keep the specific characteristics of the US market in mind, whilst ensuring we do not lose sight of the link to your German structure.

In early funding rounds, SAFE or convertible note agreements are frequently used; these initially leave the company’s valuation open and are only converted into shares in the next round. From Series A onwards, US investors usually follow the NVCA standard – a package comprising a term sheet, investment agreement and shareholders’ agreements, which is widely recognised in the US and speeds up negotiations because both sides are familiar with the structure.

We support both start-up teams and investors through these funding rounds and negotiate valuation, control rights and liquidation preferences from both perspectives. This results in a structure that remains viable for the next round and balances the interests of both founders and investors.