|
|
|
What should I be concerned about when making an investment in a portfolio company at a valuation lower than that evidenced by a previous round?
In down rounds, investors must carefully analyze antidilution protections in existing rounds and structure the new investment so that existing antidilution provisions do not adversely affect all concerned. Investors should consult with counsel regarding corporate law issues of duties owed to minority shareholders and contract law issues regarding the application or waiver of preemptive rights. The new investment security must be properly structured to achieve the desired rate of return.
|
|
