Start of Arbitrum M&A Working Group

DAO Programs & Initiatives
2

Summary: M&A Working Group Call #1 (March 20)

Hi all, thanks for the great first session on Wednesday!
As discussed find below the summary together with the next steps.
We are currently scoping out the legal workstream and tasks for next week.

Also, feel free to join our TG channel for comms and questions here.

Added and shared in the TG chat: Our current working doc on legal set-up here, feel free to comment /amend. We’ll discuss this in our slot on Wednesday.

Looking forward to next week!

I. Key Questions (Output from group exercise)

Priority Questions (3 - 5 votes):

  1. Legal Set-up: How can we ensure legal clarity regarding the ownership of M&A targets? (5 votes)
  2. Portfolio Management: What strategies can be implemented for managing acquired companies, especially when founders depart? (5 votes)
  3. Target Selection: How should decisions be made concerning the selection of targets for acquisition? (3 votes)

Other main questions:

  • What measures are necessary to mitigate common DAO frictions, and is there a need to appoint a board or manager for micromanagement?
  • How can we ensure cross-DAO alignment of strategies across short, mid, and long-term objectives?
  • What is the role of the Foundation in supporting the DAO’s governance and operational strategies?

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II. Next Steps

Legal

  • Legal questions owned a large portion of discussion and emphasized the need to gain further legal and regulatory clarity around investment structures for a DAO, ownership, and management of M&A targets.
  • To target this topic we are currently working together the AVI initiative (who took a first stab at some of the relevant overlapping questions, e.g., “How can a DAO invest in equity? Who holds it? etc.”) building up on an exercise from @coinflip and Dan. We are building up on this and are drafting a day-1 legal structure to be vetted by the Arbitrum Foundation compliance team.
  • If anyone has additional input here, feel free to reach out.

Strategic objectives

  • This topic came up in the call multiple times. We are aware that this is largely unsolved as not a priority, or being progressed on different fronts. As our working group does not need 100% solved strategic objectives now (we need to get many things sorted before even thinking about operationalizing the search of M&A targets) we work under a work-in-progress assumption if needed (building up on Strategic Big Bets from the GovHack and other info like the target areas put together last year by @dk3.

III. Further Notes

  • There are key outstanding questions on the legal side around investment/equity structures and operational involvement of community/Foundation/Offchain Labs.
    • Debated the rationale around DAOs acquiring strategic objectives vs. other associated entities.
  • Highlighted the need for a method of assessing and selecting M&A targets, which will largely be contingent on the creation of overarching strategic objectives and priorities for the DAO.
    • What metrics are to be put in place to assess the performance of acquired assets?
  • There was an emphasized importance of determining the capacity in which the community will direct capital allocation.

CCing: @krst @AlexLumley @lino @raam as promised to keep you up to date.

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