definition

a type of anti-dilution protection which provides that where shares are issued at a lower price than holders paid for their preference shares, the conversion price is adjusted down in accordance with a formula. The weighted average formula looks at the shares issued across the life of the company, which results in a much fairer adjustment from the founders’ perspective, as compared to full ratchet anti-dilution protection.

Weighted average formulas can be broad based or narrow based.


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