{"id":865,"date":"2011-06-10T08:08:54","date_gmt":"2011-06-10T12:08:54","guid":{"rendered":"http:\/\/www3.law.harvard.edu\/journals\/hlpr\/?p=865"},"modified":"2015-10-02T15:52:50","modified_gmt":"2015-10-02T15:52:50","slug":"crowdscouring-a-beer-company-buyout","status":"publish","type":"post","link":"https:\/\/journals.law.harvard.edu\/lpr\/2011\/06\/10\/crowdscouring-a-beer-company-buyout\/","title":{"rendered":"Crowdscouring a Beer Company Buyout"},"content":{"rendered":"

Anthony Kammer\u00a0<\/span><\/em><\/p>\n

I came across an\u00a0interesting post<\/a>\u00a0in the Blog of the Legal Times yesterday about two advertising executives who attempted to raise $300 million from online investorks in order to purchase Pabst Blue Ribbon. Rather than approaching large investors, they came up with a rather brilliant method for crowdsourcing the buyout.\u00a0The two men,\u00a0Michael Migliozzi II and Brian William Flatow,\u00a0actually managed to raise $200 million before the SEC stepped in to block the purchase.<\/p>\n

Since late 2009, the two friends operated\u00a0buyabeercompany.com<\/a>\u00a0(now defunct) and\u00a0created a facebook page and a twitter account that helped them coordinate investors. The idea was to attract investors who would pledge money, as little as $5 or as much as $250,000, and they would only be asked to pay this money if they reached the threshold $300 million. Like\u00a0Kickstarter<\/a>\u00a0and\u00a0PledgeMusic<\/a>, there was no money out of pocket until the project\u2019s target had been reached.<\/p>\n

The SEC\u00a0canned<\/a>\u00a0the planned takeover because the two organizers had failed to properly register what amounted to a security issuance. In effect, the website was a stock issuance that required registration and disclosures under Sec. 5(c) of the Securities and Exchange Act.\u00a0Given that there were no sanctions accompanying the SEC\u2019s \u201ccease and desist\u201d\u00a0order<\/a>, there is some chance that after properly registering and disclosing the required information, this might not be the end of this story.<\/p>\n

Crowdfunding<\/a>\u00a0in its various manifestations has been spreading rapidly and there are\u00a0plenty<\/a>\u00a0of<\/a>\u00a0interesting<\/a>resources<\/a>\u00a0around the internet. But it\u2019s curious that there haven\u2019t been more efforts to use the internet to enable widely distributed groups of people to buy up more major companies. Beer companies and sports teams seem like obvious candidates. While SEC filings are a small hurdle, there\u2019s no obvious reason that the broader investing public couldn\u2019t do a targeted takeover of any number of corporations through these kind of threshold pledge plans.<\/p>\n

Like the far more controversial\u00a0Bitcoin<\/a>\u00a0peer-to-peer currency, crowdfunding promises to decentralize and generally transform corporate finance around the world.\u00a0Perhaps as campaigns like \u201cBuy A Beer Company\u201d become more common, the SEC will develop new protocols for facilitating these kinds of online purchases while still ensuring that potential buyers and sellers are being dealt with honestly and transparently. In the meantime, there\u2019s going to be a real need for lawfirms or other organizations willing to perform the SEC filings for the coming surge in crowdfinanced buyouts.<\/p>\n","protected":false},"excerpt":{"rendered":"

Anthony Kammer\u00a0 I came across an\u00a0interesting post\u00a0in the Blog of the Legal Times yesterday about two advertising executives who attempted […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[2],"tags":[],"class_list":["post-865","post","type-post","status-publish","format-standard","hentry","category-blog"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/peZQka-dX","_links":{"self":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts\/865","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/comments?post=865"}],"version-history":[{"count":0,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/posts\/865\/revisions"}],"wp:attachment":[{"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/media?parent=865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/categories?post=865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/lpr\/wp-json\/wp\/v2\/tags?post=865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}