The SEC’s review process of all securities intended to be sold to the public. The SEC requires that a registration statement be filed in conjunction with any public securities offering. This document includes operational and financial information about the company, the management and the purpose of the offering. The registration statement and the prospectus are [...]

The right or obligation of a company to repurchase its own shares.
Redemption Rights – Rights to force the company to purchase shares (a “put”) and more infrequently the company’s right to force investor to sell their shares (a “call”). A Put allows one to liquidate an investment in the event an IPO or public merger [...]

Redeemable preferred stock, also known as exploding preferred, at the holder’s option after (typically) five years, which in turn gives the holders (potentially converting to creditors) leverage to induce the company to arrange a liquidity event. The threat of creditor status can move the founders off the dime if a liquidity event is not occurring [...]

The common name for a preliminary prospectus, due to the red SEC required legend on the cover.

The act a broker/dealer makes with an investor to confirm a transaction.

Capital provided for a significant overhaul of a company’s financial structure.

The reorganization of a company’s capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility. Recapitalization can be an alternative exit strategy for venture capitalists and leveraged buyout sponsors.

Ratchets reduce the price at which venture capitalists can convert their debt into preferred stock, which effectively increases their percentage of equity. Often referred to as an “anti-dilution adjustment.”

Qualified professional asset manager as defined by ERISA.

The right to sell a security at a given price (or range) within a given time period.