What is a Unicorn?

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Defining Unicorn

In the business world, a unicorn refers to a company with an extremely high valuation, typically in the billions. Like the mythical creature, a unicorn is rare but in the current market, its numbers are growing. See a recent article in the Business Insider on the 9 most valuable startups in the world.

Why Unicorns Matter to Lawyers

Unicorn is a term corporate lawyers should know to better understand their clients goal, whether they are representing company side or investor side. From a company standpoint, the race is on to be the next unicorn, with a high valuation driving up the fair market value of the company’s stock. From an investor’s standpoint,┬áthe unicorn signals a goal; they seek the illusive high valued company to provide high returns on investments made. Unicorn is also used in discussions on the current market trend of companies being valued at billion dollar valuations, and the skepticism and issues surrounding this trend, including whether such valuations are realistic, the longevity of these valuations in the market and the effects of these valuations being issued. See a recent article in Techcrunch on concerns resulting from the pressure to find the next unicorn. As corporate lawyers, we’re interested to know if and for how long this trend will continue, as the hunt for the unicorn means big business for all involved.

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