Convertible Debt A promissory note or other debt obligation that is convertible by the holder into common stock or other securities of a corporation at an established conversion price. An intensive and thorough review of the business, financial and legal condition and prospects of a company seeking funding. An investment in a company in Common or Preferred Stock for which there is no legal obligation of repayment. The amount of return is dependent upon the success and profitability of the company. The anticipated means by which a venture capital or other investor expects to obtain liquidity for its investment.
Exit strategies can include an IPO or a merger sale of assets transaction.
The first time a company issues stock to the public and becomes a publicly traded company, thereby achieving liquidity for the stock. An agreement by an insider, employee or large shareholder, restricting the ability of the holder of stock to sell their stock on the open market or to others. Transaction A transaction involving a merger, acquisition or sale of assets. The right given to the holder of common stock to include some or all of their shares in a public offering undertaken by a company. Preferred Stock An equity interest in a corporation that contains certain preferences over common stock such as a guaranteed dividend, special voting rights, a liquidation preference over common stock, the ability to name a director, etc.