AlphaTakes – Anti-Dilution Provisions

In this AlphaTakes video, Matt Storms discusses anti-dilution provisions in investor transactions involving an emerging company.  He outlines the different types of anti-dilution protection provisions that are typically negotiated and how they commonly impact the company.

Here are the key takeaways from this video:

    (1) Anti-dilution provisions contain rights in which the company provides some level of downward price adjustment to the holders of the rights in the event that the company sells securities at a lower price

    (2) The two most common types of anti-dilution provisions are full ratchet and weighted average, with weighted average being used in the overwhelming majority of circumstances

    (3) The exceptions or carveouts to the anti-dilution adjustments can be important in negotiating anti-dilution provisions

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