One of the most common sources of conflict between venture capitalists and entrepreneurs who are engaged in striving to build a valuable company is the decision whether to sell the company. It is no surprise when venture capitalists want to sell before entrepreneurs feel ready. Venture capitalists benefit from sales in ways that entrepreneurs don’t, while entrepreneurs benefit from continuing the business in ways that venture capitalists don’t. Professor D. Gordon Smith discusses these so-called "private benefits" on each side of the relationship in his analyisis of Roberts v. Financial Technology Ventures, 2007 U.S. Dist. LEXIS 78448. In applying Delaware law, the court found that a company’s founder breached his fiduciary duty of loyalty to the company by securing a $10 million side payment as consideration for procuring a buyer for the company. Professor Smith writes:

     In light of Judge Trauger’s holding, practicing attorneys representing entrepreneurs should ensure that their clients are protected in the event of a sale of the company, either through their employment agreement or through their share ownership.Though entrepreneurs may feel justified in seeking additional compensation for private benefits that are lost through the sale of their company, fiduciary law may constrain entrepreneurs who serve as corporate officers or directors.  

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