All companies have common stock. For many companies, that may be the only class of stock. However, when the time comes to bring in outside financial investors, the most common class of stock to issue is preferred stock. The use of preferred stock provides several benefits to investors, which make the investment more attractive, and presents both advantages and disadvantages to holders of common stock. The Benefits of Read More
Cap Table Basics: Making Room For New Stockholders
For an investor-backed, high-growth company, issuing stock, to existing and new stockholders, will be a regular occurrence. Raising money through equity financings is the primary time stock is issued, but companies will also issue stock (or stock options) to employees, consultants and others who contribute value to the company. For companies going through a financing or stock issuance for the first time, the impact Read More
Stock Valuation Issues
For most high-growth companies, the ability to offer equity to founders, employees, consultants, advisors, directors, and others is often critical for success. Equity-based compensation can align interests, keep everyone motivated to ensure the enterprise’s success, and allow companies that can’t afford to compete on salary to attract top-quality talent. However, to use issue stock, options, or other equity-based Read More
