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Leveling the Playing Field with Investors
Key considerations for directors:
• Small-cap investors enjoy a material advantage over companies when negotiating financings.
• Regardless of the structure, boards need to make sure that they understand pricing mechanisms, which are often not as straightforward as they seem.
• Convertible instruments have a litany of provisions that might seem innocuous but that require board scrutiny.
• What companies thought they agreed to in a “term sheet” might look very different once the definitive deal documents arrive.
• Officers and directors need to involve counsel and auditors in financing negotiations every step of the way.
Common mistakes to avoid:
• Before small-cap ...