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Reverse dilution

When stock is returned to a company by departed employees whose stock has not yet vested.

Golden Handcuffs

Financial incentives that discourage founders and early employees from leaving a company before certain dates or milestones. Often found in an acquisition scenario, an example would be a cash or equity payout by an acquiring company that is earned over time.

Shares Outstanding

Refers to a company's stock currently held by all of its shareholders, including shares held by institutional investors and restricted shares owned by a company's executives. This number is used to calculate key metrics such as a company's market capitalization, earnings per share, and cash flow per share.

Fully Diluted Shares Outstanding

The total number of shares that would be outstanding if all possible sources of conversion (convertible bonds and stock options) were exercised.


The reorganization of a company's capital structure.

Rights of Co-Sale With Founders

A clause allowing venture capital investors to sell shares in a company at the same time that the founders decide to sell.

Stock Option

A right to purchase or sell a share of stock at a specific price within a specified period of time. Stock options are often used as long term incentive compensation for management and employees at high-growth companies.

Investment Syndicate

A group of investors that agree to participate in an investment round of funding for a company.

Tag-Along Right

The right of a minority investor to receive the same benefits as a majority investor. This often applies to a sale of securities by investors and is also known as co-sale right.

Washout Round

A round of financing where previous investors, the founders, and management suffer significant dilution. The new investor in a washout round will typically gain majority ownership and control of the company.


A decrease in the reported value of an asset or company.