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No offense, but that's not common sense, it's naivete. Strong anti-dilution rights causes many problems. Most commonly, it makes it very difficult to attract
by rmah 13y ago
No offense, but that's not common sense, it's naivete. Strong anti-dilution rights causes many problems. Most commonly, it makes it very difficult to attract new investors.
Also, your math ("just multiply their shares to reflect any new shares that are issued") doesn't work. Try it on paper and you'll see why :-)
- phaus 13y agoI didn't really explain myself very well, because as I said, I'm just a layman when it come to the subject of stock options and equity. My post was mostly a question. I wasn't trying to say that the new shares shouldn't detract from the overall value of each share, clearly no matter how many there are the company will still only have 100% of it's value to distribute amongst shareholders. Unfortunately, that's the way I sounded. What I'm really trying to understand, is how a person can go from owning a significant percentage of a company, to having his shares become worthless, even if the company is worth quite a bit. It seems like any system of regulations or laws that allows something like that to occur must be fundamentally flawed. I've taken some economics classes, but they don't really delve into issues like this. Can anyone recommend a good resource for learning how this works?