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Obviously that barrier has been brought down with low-cost ability to capture, stream and distribute content over the Internet. He believes that one of the financial metrics taught at business schools and reinforced by Wall Street has accelerated offshoring of industries. “Online education is truly going to kill us.”
. At the financial level , and assuming a harvest of the investment in the company without the need for further financing, two terms stand out as driving economics: the dividend and the liquidationpreference. Second a liquidationpreference and a participation. First , dividends.
It is driven by the following: • The Best Metric for the Health of a Company is Cash Flow. At the end of the period, all profits and proceeds are distributed to the various partners on a pre-determined split. This is very counter-intuitive but critical insight for emerging company entrepreneurs and those that back them to grasp.
Anything that hints of a down round brings questions about the success metrics that have already been “booked.” If you really want to liberate your own common shares and those of your employees, then you want to convert the preferred to common and remove both the control and the liquidationpreference over your shares.
Due to aggregate liquidationpreferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless. If you can’t figure this out yourself, you should probably build a liquidationpreference spreadsheet to model how liquidationpreferences work depending on M&A transaction value.
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