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. Consider it a sales & marketing expense for them. You need to know how liquidations preferences work. So eventually you have your company funded but only 2 of the 5 people who started the company are still around.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Tim Keane

JANUARY 12, 2010

It also assumes the entire value of the investment is captured for investors at a sale of the company in the time specified in the term-sheet. This results in a range of sale prices; in this example from $118.6MM to $21MM.   In most cases, the preferred dividend is paid before any dividend is paid to the common.

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? Another significant advantage of issuing convertible notes is to avoid giving the investors any control.

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Startup Company Lawyer

JANUARY 31, 2011

Reactions are mixed, from “ no big deal ,&# to “ disrupting angel investing &# to “ you’d be crazy not to take this deal &# to “ facilitating a bubble &# to “ strategic perfection.&# TechCrunch reports that within 24 hours, 36 of the 43 companies had already signed the convertible debt documents.

Preferred Stock 60

Preferred Stock Liquidation Preference IPO Common Stock 60

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

Both Sides of the Table

SEPTEMBER 8, 2012

It has both a “full rachet” and “multiple liquidation preferences.” ” If you remember the three rules of sales : it’s. They share in liquidation preferences pari passu and they vote as a single class. Especially if it was memorialized in the documents why you were doing it.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294