Structuring Convertible Debt: Key Triggers, Valuation Terms
Due Diligence, Determining Priority vs. Other Creditors and Equity Holders
Recording of a 90-minute premium CLE webinar with Q&A
This CLE course will provide corporate finance counsel with guidance on structuring convertible notes for seed-stage financing. The panel will discuss upfront due diligence, term sheet negotiation, and critical terms, including the discount rate, valuation cap, and triggers for the conversion from debt to equity.
- Advantages of convertible debt as seed-stage financing
- What to address in the term sheet
- Due diligence before closing
- Conversion triggers
- Issuance of equity
- Sale of company or company assets
- Factors in determining equity value at the conversion
- Discount rate
- Valuation cap
- Interest rate under the note
The panel will review these and other key issues:
- Without an accurate valuation, how should an investor determine an appropriate amount of seed-stage financing to provide a startup company?
- When is the right of conversion to equity exercised?
- What is the typical discount rate, and how is the valuation cap determined at the time of the convertible note transaction?
- What is the priority of the convertible note vis-a-vis other creditors and equity holders of a startup?
Kristine M. Di Bacco
Ms. Di Bacco provides strategic counseling to emerging and high-growth companies primarily in the consumer and... | Read More
Ms. Di Bacco provides strategic counseling to emerging and high-growth companies primarily in the consumer and enterprise tech, fintech, digital health, social networking, software and cloud computing industries.Close
Mr. Teichman's practice focuses on corporate law, with an emphasis on private equity and venture capital... | Read More
Mr. Teichman's practice focuses on corporate law, with an emphasis on private equity and venture capital transactions. He acts for companies in emerging industries, including blockchain and artificial intelligence. Joshua also works with Torys’ Technology Contracting Practice.Close