Both Sides of the Table

SEPTEMBER 5, 2012

If I could persuade you that they’re already in these documents would you consider abandoning this structure? Because convertible debt deals often have both a ‘full ratchet’ and often have ‘multiple liquidation preferences’ “ Yup. Convertible notes often have multiple liquidation preferences.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

JANUARY 21, 2010

You never got around to agreeing exact equity splits but you had many conversations about it. They’ll invite you out to events in which you’ll meet their other clients, you can get to know them socially and hopefully develop a real mentorship relationship where every conversation is not on the clock.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Tim Keane

JANUARY 12, 2010

.   At the financial level , and assuming a harvest of the investment in the company without the need for further financing, two terms stand out as driving economics: the dividend and the liquidation preference. Second a liquidation preference and a participation.   First , dividends.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Scott Edward Walker

APRIL 9, 2012

Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii) ii) what happens if the maturity date is reached prior to the note’s conversion to equity? Speed, simplicity and cost. What are Some of the Other Advantages of Issuing Convertible Notes?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

K9 Ventures

MARCH 23, 2011

The typical fix for this problem is to put in a cap in the note for the pre-money price for conversion. Before the era of capped notes, entrepreneurs preferred to do notes because the note essentially deferred the valuation of the company. What percent of the company should the note holder get on conversion?

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132