How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Richard - Bizlaw Your Own Question
Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10639
Experience:  30 years of corporate, litigation and international law
Type Your Business Law Question Here...
Richard - Bizlaw is online now
A new question is answered every 9 seconds

We are a startup company that wishes to raise money under a

Customer Question

We are a startup company that wishes to raise money under a Red D filing. What is the best instument to use. Ex Debt note, perferd stock, common stock, convertible debt note??
Submitted: 5 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 5 years ago.

bizlaw :

The best option for the company is either common stock or preferred stock. These do not have a fixed repayment obligation which improves the cashflow of the company. The preferred stock probably means you give up less total equity but if there are fixed dividends you impose a cashflow burden on the company. Persons buying the stock would probably prefer a debt that is convertible as that gives them creditor status with the right to convert to equity if things go well. What is ultimately selected is a function of what you think will get the best result for your particular company.

If this answer is responsive to your question, please accept it. That is how we are compensated. It would also be appreciated if you provided feed back on your view of the answer. Finally, if the answer was especially helpful you can provide a bonus. If I can be of further assistance or you have other questions in the future you can ask for me and reach me at this site.

This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.