Management and Organizational Studies 2310A/B Chapter 14: CHAPTER RECAP
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The initial capital required to start a business is usually provided by the entrepreneur and his or her immediate family. Convertible preferred stock: a preferred stock that gives the owner an option to convert it into common stock on some future date. Pre money valuation: the value of a firm"s prior shares outstanding at the price in the funding round. Post money valuation: the value of the whole firm (old plus new shares) at the price at which the new equity is sold. An important consideration for investors in private companies is their exit strategy. : a strategy detailing how investors will eventually realize the return from their investment. Taking your firm public: the initial public offering. Ipo: the process of selling stock to the public for the first time. Give private equity investors the ability to diversify. When investors sell their stake and thus diversify their holdings, the equity holders of the corporation become more widely dispersed.