Weighted Average Adjustment

May 24, 2019 by James Woolfenden

The most common form of Anti-Dilution Adjustment or Ratchet, which uses a formula to adjust the rate on which Preferred Shares convert into Ordinary Shares on a Downround to protect existing investors from Dilution. In simple terms, the Weighted Average Adjustment applies a conversion rate based upon an average of the price per share the investor originally paid and the price per share offered in the Downround. See also Full Ratchet Adjustment.