Investors may want to purchase convertible preferred stock, while the entrepreneurs may prefer to issue common stock or debt plus stock. Investors may want a management change if they believe the company's team is lacking in some skill or if they believe someone else on the team should be president. Investors often insist on this. The management team should decide these issues in advance. On price per share paid by the investor, the entrepreneurs should decide what they would like to get and what they will accept.
Logical persuasion is generally the best negotiating tactic.
Provide terms that will motivate the entrepreneurial team if they perform as planned. Provide and protect opportunities for the investor to realize capital gains and liquidity. The investor is issued additional common stock if the company completes an subsequent sales of stock at a lower price. If the investor holds convertible preferred stock, the conversion price is adjusted to equal the lower sales price. Here the conversion price is adjusted based on a weighted average of each stock issuance.