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This chapter studies the effect of convertible instruments on the mathematics of an equity round. It is shown that the traditional equations used in an equity round become inconsistent in the presence of converting securities. Two ways of resolving this inconsistency are demonstrated, corresponding to accounting for convertible instruments as a liabilities, or as notional shares in the cap table.

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Accounting Views of Convertible Instruments

  • 章节

  • 发表日期：

    2025年

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  • Michael J. Maher,
  • Ron van der Meyden

摘要

This chapter studies the effect of convertible instruments on the mathematics of an equity round. It is shown that the traditional equations used in an equity round become inconsistent in the presence of converting securities. Two ways of resolving this inconsistency are demonstrated, corresponding to accounting for convertible instruments as a liabilities, or as notional shares in the cap table.