What to consider when choosing between classes of Shares A and B?

searcher profile

November 22, 2018

by a searcher from Universidade Federal de Minas Gerais in R. Eng. Zoroastro Tôrres - Santo Antônio, Belo Horizonte - MG, Brazil

I must decide between the mix of Series A, which accrue interest but does not share the upside, and Series B

The Series A accrue interest, must be repaid in full at an exit and have no common upside. The Series B will not accrue interest but share the upside.

What is the common practice? Any thoughts?

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commentor profile
Reply by a searcher
from University of California, Berkeley in San Francisco, CA, USA
Is the series A an equity instrument with debt features? If so, then I would look at how the payout is structured and controlled. Series B sounds more straight-forward. I would look at voting rights and liquidation preference. I don't believe equity with accrued interest is a common practice....that series A sounds more like a note with equity-linked features like a warrant.
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Reply by an investor
from Western Washington University in Key West, FL 33040, USA
What is the difference between this and doing preferred and common? Curious to hear what you come up with.
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