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Preferred/common dual structure allows the preferred shares to rise in price differently than the common shares. Congrats, you've created a huge tax burden for
by joshu 12y ago
Preferred/common dual structure allows the preferred shares to rise in price differently than the common shares.
Congrats, you've created a huge tax burden for options holders.
- fsk 12y agoIf you let the options holders cash out some of their shares during the financing round, that offsets the tax issue. Then they could afford to exercise, pay the tax bill, and take some money off the table. Also, how do you come up with the price for the common shares when they aren't liquid and aren't changing hands? It seems weird to give a price of $10/share for a common share when you aren't able to sell at that price.
- joshu 12y ago409a valuation. There is a process. But generally the common price is much lower than the preferred.