RT Journal Article
SR Electronic
T1 The Antidilution Death Spiral
JF The Journal of Private Equity
FD Institutional Investor Journals
SP 35
OP 44
DO 10.3905/jpe.2002.320006
VO 5
IS 2
A1 Timothy J. Harris
YR 2002
UL https://pm-research.com/content/5/2/35.abstract
AB Private equity valuations in down rounds, when the portfolio company raises fresh money but the valuation is lower than in the prior round of funding, require careful computation because of previously negotiated antidilution provisions. These can be percentage-based or price-based antidilution. This article provides guidelines and an example of the calculations required to complete a down round when antidilution provisions are in force.