medium · Private Equity pe-core
A growth equity investor participates in a Series B round at $2.00 per share. The company later issues Series C shares at $1.00 per share. The Series B investor has 'broad-based weighted average' anti-dilution protection.
If the total shares outstanding (including the new round) is $20 million and the new round issued 5 million shares, how is the new conversion price determined?
- By multiplying the old price by the percentage of dilution
- By immediately resetting the conversion price to $1.00
- Using the formula CP_2 = CP_1 × (A+B)/(A+C)
- By averaging $2.00 and $1.00 to get $1.50
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