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Written by Jason Gordon

Updated at February 24th, 2021

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    • How to Grant Common Stock
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  • Due Diligence
  • Stock Purchase Agreement Structure
  • Company Legal Opinion
  • Rolling Closing Date
  • Funding Transaction Costs
  • Counsel & Expenses

Capital Structure

  • Business Capital Structure
    • What is a Capitalization Table (Cap Table)
  • Authorized Shares
  • Common and Preferred Shares
    • Non-cumulative (Stock)
    • Guaranteed Stock
  • Preferred Convertible Shares
  • Preferred Liquidation Preference
  • Participating Preferred Shares
  • Participating Convertible Preferred
  • Issued, Outstanding, and Fully Diluted
  • What is Capitalization & How do you Calculate It?
  • Options Pools & Capitalization
    • Stock Option
    • Exercise Price or Strike Price
    • Considerations in Exercising a Stock Option
    • 83(b) Election
      • 83(a)
      • 83(b) - Vesting of Stock Awards
      • What Happens if I Miss My 83(b) Election
  • Consideration in Granting Stock or Options
  • Overview of Equity Distribution to Founders
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    • More on Founder's Equity
  • Class F Stock
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    • Performance Based Vesting
  • Vesting Schedule & Follow-On Financing
    • Accelerated Vesting
  • Calculate Stock Ownership Percentage

Equity Funding Process

  • Overview of Business Funding
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    • What is a Seed Round?
    • Tax and Securities Law Considerations
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  • Debt vs Equity (A Balance)
    • SAFE vs Convertible Note vs Equity Financing
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Term Sheet Provisions

  • Term Sheet Provisions
  • Dividend Rights
  • Liquidation Preference
    • How Does Liquidation Preference Work?
  • Participation Rights & Caps
  • Liquidation Preference & Follow-on Financing
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  • Anti-dilution Protection
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Other Concepts


    • Inchoate Definition
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  • Regulation FD Definition
  • Regulated Investment Company Definition
  • Right of First Offer Definition
  • Reverse Takeover (RTO) Definition
  • Rule 144A Securities Regulation Definition
  • National Association of Securities Dealers (NASD) Definition
  • No Shop Clause Definition
  • Negative Control Provisions Definition
  • Carve Out (Finance) Definition
  • Celler-Kefauver Act Definition
  • Central Registration Depository Definition
  • Form 10-K Definition
  • SEC Form S-1 Definition
  • SEC Form S-4 Definition
  • State Securities Laws Blue Sky Laws
  • FTC Act Antitrust Law
  • Business Capital Structure
  • Best Efforts (IPO Underwriting) Explained
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  • Carve Out Definition
  • Collusion Explained
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  • Lead Investor Venture Capital Definition
  • Liquidity Event Definition
  • Liquidation Definition
  • Letter of Intent Definition
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  • Option Pool Definition
  • Piggyback Registration Definition
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  • Pre-Money and Post-Money Cap Table Definition
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  • Privitization Definition
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  • Oversubscription Definition
  • Over the Counter Trade Definition
  • Lock Up Period Definition
  • Prospectus Definition
  • Pay to Play Definition
  • Private Company Definition
  • Passive Foreign Investment Company Definition
  • Private Placement Memorandum (PPM) or Offering Memorandum Definition
  • Right of First Refusal Definition
  • Reverse Vesting Definition
  • Redemption Period Definition
  • Seed Capital Definition
  • Regulation S-B Definition
  • Regulation S-K Definition
  • Regulation S-X Definition
  • Reporting Company Definition
  • Subscription Agreement Definition
  • Staying Private Definition
  • Recoupment Definition
  • Realized Pay Definition
  • Regulation S Definition
  • Private Placement Financing Definition
  • Abbrochment Definition
  • Series or Rounds of Financing (Startups) Definition
  • Standard Industrial Classification (SIC) Code Definition
  • Summary Compensation Table Definition
  • Business Development Company Definition
  • Private Investment Company Definition
  • General Solicitation Definition
  • Arms Length Transaction Definition
  • Conversion Ratio Definition
  • Tying Arrangement Definition
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  • Unit Offering (Securities) Definition
  • Uniform Securities Act Definition
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  • Up Round Definition
  • Targeted Registered Offering (Greenmail) Definition
  • Tag Along Rights Definition
  • Venture Debt Definition
  • Vesting Schedule Definition
  • World Business Angels Association Definition
  • Backdoor Listing Definition
  • Vesting Definition
  • Crowdfunding Definition
  • Hart Scott Rodino Act Definition
  • Merger Definition
  • Option (Stock) Definition
  • Participating Preferred Stock Definition
  • Tender Offer Definition
  • Term Sheet Definition
  • Private Equity Definition
  • Venture Capital Definition
  • All Holders Rule Definition
  • Business Development Company Definition
  • Blockholder (shareholder) Definition
  • Blind Pool Definition
  • Blank Check Preferred Stock Definition
  • Bullet Dodging Definition
  • Acceleration (Securities Act) Definition
  • Basket Purchase Definition
  • Offering Circular Definition
  • If-Converted Method (Securities) Definition
  • Warrant Coverage Definition
  • Buyout Definition
  • Buyback Definition
  • Buy In Management Buyout (BIMBO) Definition
  • Types of Takeover (Corporate) Definition
  • Undetachable Stock Warrant Definition
  • Underwriter Syndicate Definition
  • Backstop (Securities Issuance) Definition
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  • Fair Funds for Investors Definition
  • Laddering Definition
  • Management and Employee Buyout Definition
  • Washout Round Definition
  • Undersubscribed (IPO) Definition
  • Certified Financial Divorce Practitioner Definition
  • Price Fixing Definition
  • Preliminary Prospectus Definition
  • Committed Capital Definition
  • Venture Capital Backed IPO Definition
  • Vertical Merger Definition
  • Master Fund Definition
  • White Knight Definition
  • White Squire Definition
  • Common Stock Equivalent Definition
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  • Restricted Stock Unit Definition
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  • Short-Swing Profit Rule Definition
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  • Subscription Right Definition
  • Straw Buyer Definition
  • Turnaround (Company) Definition
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  • Small Company Offering Registration Definition
  • Sophisticated Investor (Securities) Definition
  • Direct Public Offering Definition
  • Disclosure Statement Definition
  • Disgorgement Definition
  • Distribution Waterfall Definition
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  • Share Purchase Rights Definition
  • Reverse Triangular Merger Definition
  • Schedule K-1 Definition
  • CINS Number Definition
  • Cash Out Merger Definition
  • Schedule 13D (SEC) Definition
  • Forward Triangular Merger Definition
  • Safe Harbor (Generally) Definition
  • Secondary Offering Definition
  • Accelerated Share Repurchase Definition
  • Accelerated Vesting Definition
  • Friendly Takeover Definition
  • Full Ratchet Definition
  • Tuck-In Acquisition Definition
  • Accumulating Shares Definition
  • Adjustable Rate Preferred Stock Definition
  • Accelerated Resolution Program Definition
  • Academy of Financial Divorce Practitioners Definition
  • Strategic Buyer Definition
  • Classified Shares Definition
  • Exempt Transaction Definition
  • Non-Accredited Investor Definition
  • Notice Filing Definition
  • Sweat Equity Definition
  • Friends and Family Shares Definition
  • Escrow Definition
  • Fully Subscribed Definition
  • Going Private Definition
  • Blank Check Company Definition
  • Phantom Stock Plan Definition
  • Material Insider Information Definition
  • Insider Information Definition
  • Monopolistic Competition Definition
  • Cliff Vesting Definition
  • Mergers and Acquisitions Definition
  • Lock-Up Agreement Definition
  • Intrastate Offering Definition
  • Investment Advisors Act of 1940
  • Corporate Raider Definition
  • Standstill Agreement Definition
  • Misappropriation Theory Definition
  • Bailout (Company) Definition
  • Spinoff Definition
  • Spin Out Definition
  • Liquidation Preference Definition
  • Stock Appreciation Right Definition
  • Dilutive Acquisition Definition
  • Seasoned Issue Definition
  • Participating Convertible Preferred Stock Definition
  • Institutional Buyout Definition
  • Bid Rigging Definition
  • High Net Worth Individual Definition
  • Indication of Interest Definition
  • Special Purpose Vehicle / Special Purpose Entity Definition
  • Secondary Buyout Definition
  • Regulation SHO Definition
  • Franchise Disclosure Document Definition
  • IPO Lockup Definition
  • Convertible Adjustable Preferred Stock Definition
  • Control Premium Definition
  • Corporate Kleptocracy Definition
  • Carried Interest Definition
  • Break Up Fee Definition
  • Minority IPO Definition
  • Gray Knight (Hostile Takeover) Definition
  • Bought Deal Definition
  • Closed-Market Transaction Definition
  • Bailout Takeover Definition
  • All Cash All Stock Offer Definition
  • People Poison Pill Definition
  • Busted Takeover Definition
  • Pathfinder Prospectus Definition
  • Preferred Equity Redemption Stock Definition
  • Letter of Comment Definition
  • Direct Stock Purchase Plan Definition
  • Bust-Up Takeover Definition
  • Form S-3 Filing Definition
  • Form S-8 Filing Definition
  • Dirks Test Definition
  • Average Cost Pricing Rule Definition
  • Pump and Dump Definition
  • Best Price Rule 14D-10 Definition
  • Amalgamation Definition
  • Corporate Financing Committee Definition
  • Shotgun Clause Definition
  • Employee Stock Ownership Plan Definition
  • Competitive Tender Definition
  • Letter of Indemnity Definition

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